Example:Operating Cycle Inventory period aAverage inventory=(200,000+300,000)/2=250,000 Inventory turnover 820,000/250,000 3.28 times Inventory period 365/3.28 111 days Receivables period Average receivables =(160,000+200,000)/2 =180,000 Receivables turnover 1,150,000/180,000 6.39 times Receivables period 365/6.39 57 days Operating cycle 111 57 =168 days 88 Example: Operating Cycle n Inventory period q Average inventory = (200,000+300,000)/2 = 250,000 q Inventory turnover = 820,000 / 250,000 = 3.28 times q Inventory period = 365 / 3.28 = 111 days n Receivables period q Average receivables = (160,000+200,000)/2 = 180,000 q Receivables turnover = 1,150,000 / 180,000 = 6.39 times q Receivables period = 365 / 6.39 = 57 days n Operating cycle = 111 + 57 = 168 days