Merryl Enterprises currently has an operating cycle of 62 days.

. Merryl Enterprises currently has an operating cycle of 62 days. The firm is analyzing some operational changes, which are expected to increase the accounts receivable period by 2 days and decrease the inventory period by 5 days. The accounts payable turnover rate is expected to increase from 42 to 46 times per year. If all of these changes are adopted, what will the firm’s new operating cycle be?

Accounts payable turnover rate expected to increase from 42 to 46 times a yearAverage payment period:No of days/accounts payable turnover=365/42 = 8.7 or ~9 days=365/46 = 7.9 or ~8 days…