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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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