CFA Practice Question

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CFA Practice Question

An analyst has collected the following data about a firm:

Receivables turnover = 10 times
Inventory turnover = 8 times
Payables turnover = 12 times

What is the average receivables collection period, the average inventory processing period, and the average payables payment period respectively? (Assume 360 days in a year)
A. 36 days; 45 days; 30 days
B. 45 days; 36 days; 30 days
C. 33 days; 30 days; 20 days
Explanation: Receivables collection period = 360/10 = 36 days
Inventory processing period = 360/8 = 45 days
Payables payment period = 360/12 = 30 days

User Contributed Comments 4

User Comment
geet Somebody explain how they got this?
Shelton by formulae, i guess.
dimanyc Just get the first one, and you can see the only aceptable answer right away!
GBolt93 since when are these formulas simplified to 360 instead of 365?
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