How do you calculate the working capital cycle in the November 2006 Merbatty boat case?

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Question asked by:

Tania - view profile

 Merbatty boat case NoV 2007

I know that we usually calculate the working capital cycle as

Debtors days + Inventory days - Creditors days = Working capital cycle. 


But while I was analysing the preseen for Merbatty boat case (Nov 2007) it included information that customers were paying for boats in set installments and I feel that because they are partly financing the working capital cycle, this should also be incorporated in calculating the working capital cycle.

I do have the answer for this calculation. However please I need someone to show me how they got the answer. (I hope someone who is analysing past cases would kindly help me in this problem)

Thank you.