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    Question

    Which of the following is typically excluded from the

    calculation of the firm’s working capital needs when using the Operating Cycle method?
    A Accounts payable Correct Answer Incorrect Answer
    B Accounts receivable Correct Answer Incorrect Answer
    C Inventory Correct Answer Incorrect Answer
    D Fixed assets Correct Answer Incorrect Answer
    E Cash equivalents Correct Answer Incorrect Answer

    Solution

    The Operating Cycle method focuses on the conversion of current assets (like inventory and receivables) into cash and excludes long-term assets such as fixed assets, as they are not part of the day-to-day operational cycle.

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