A company is active in the field of clothing. All sales are made on credit. Calculate the Operating Cycle (in days) of the business taking into account the following provisions:
                          €
• Sales     5,600,000
• Accounts receivable 506,000
Accounts payable 210,000
• Percentage (return) Gross Profit 25%
• Inventories:
• Final stock 350,000
• Production 550,000
• Raw material 220,000
It is estimated that the cost of the raw material is 50% of the total cost of sales.

A. Calculate the Operating Cycle in days.
B. Mention and comment on 4 ways/measures by which the company can reduce the operating cycle.

Answer rating: 100% (QA)

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