How to work out the cash cycle
The cash cycle is the number of days between paying a supplier and being paid by a customer. Work it out from three periods.
Task 1From paying out to being paid3 questions
The cash cycle is the number of days between paying a supplier for goods and being paid by the customer who buys them. It is also called the working capital cycle.
It is the inventory holding period plus the receivables collection period, less the payables payment period.
| Period | Days |
|---|---|
| Inventory holding period | 30 |
| Receivables collection period | 45 |
| Payables payment period | 35 |
Task 2One delivery, day by day3 questions
Task 3The money in the cycle3 questions