What is a 'good' number of days for a working capital cycle?

There is no single 'good' number; it varies significantly by industry. Supermarkets might have a negative cycle, while a construction company will have a very long one. The key is to compare it to industry averages or the company's own historical performance.

Will I lose marks for using Cost of Sales for the payables calculation?

No, you will not lose marks if credit purchases are not provided. In fact, it's the expected professional technique to use Cost of Sales as a reasonable proxy, and you should state your assumption.

How many hours should I spend revising this topic?

Focus on understanding, not hours. Spend 2-3 focused 45-minute sessions on it. One session for the mechanics, one for a practice question, and one to review the common mistakes and examiner expectations.

What if I get the calculation completely wrong in the exam?

Don't panic; examiners apply the 'own figure' rule. If you use your incorrect number in subsequent parts of the question correctly, you will still earn marks for your method and interpretation. The key is to show your workings clearly.

Is a negative working capital cycle a good thing?

It can be, as it means customers pay you before you have to pay your suppliers (e.g., Dell, supermarkets). However, it can also be a sign of overtrading and puts a huge strain on supplier relationships, which is a significant risk.

How do I know if I'm ready to move on from this topic?

You are ready when you can write down the three main formulas from memory and correctly apply them to a simple example, like the one in this article, and explain what the final number means in one sentence.

FM Financial Management

Working Capital Cycle (FM) Explained

Understand the ACCA FM working capital cycle with a full example. Learn the formula, how to calculate it, and what examiners want to see to pass.