The operating cycle is the time that elapses between a company's cash payment to suppliers for inventory purchases and the collection of cash from sale of inventory to customers.

Question

Quizplus · Accepted Answer

The operating cycle is indeed the time it takes for a company to convert its cash into inventory, sell that inventory, and collect the resulting cash from customers. It includes the time for inventory to be manufactured or acquired, as well as the time it takes for customers to pay for their purchases.

The Operating Cycle Is the Time That Elapses Between a Company's