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TEC Capital has 40 days of receivables, 42 days of inventory, and 38 days of payables. The net operating cycle (in days) for TEC Capital is closest to:

A. 2
B. 44
C. 80
D. 82
E. 120

Answer :

Final answer:

The net operating cycle of TEC Capital is 82 days.

Explanation:

The net operating cycle is a measure of the time it takes for a company to convert its inventory into cash. It is calculated by adding the days of inventory on hand to the average collection period for accounts receivable and subtracting the average payment period for accounts payable. In this case, TEC Capital has 40 days of receivables, 42 days of inventory, and 38 days of payables.

To calculate the net operating cycle, we add the days of inventory (42) and the days of receivables (40), and then subtract the days of payables (38).

Net operating cycle = 42 + 40 - 38 = 82 days. Therefore, the closest answer choice is D. 82.

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