Assume payable turnaround is defined as: Credit purchases / Accounts payable A company with negative net operating cycle has a) Inventory turnaround > payable turnaround , Accounts Receivable turnaround > payable turnaround b) Inventory turnaround < payable turnaround , Accounts Receivable turnaround < payable turnaround c) # of days of accounts recievable < # of days accounts payable d) # days payable > # of days of inventory e) payables changes that far exceed rise in inventory and accounts receivable as with most of my other questions, i made this one up too. so warnings upfront if you find this question uneasy, uncertain or lacking cohesiveness
I say neither one of them.
ok, when is net opertaing cycle < 0? when DOH+DSODPO (b)after you divide each with 1/365 to obtain DOH, DSO and DPO, the signs reverse, so you have DOH>DPO, DSO>DPO, this is not the answer © and (d) cannot tell until you know DOH for © and DSO for (d) (e) this one is ambiguous, you don’t know if the change in payables was up or down, compared to each of the other terms individually or as a sum.