The most important differences between a service business and a retail business are reflected in their operating cycles and financial statements.

Question

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Service businesses typically have shorter operating cycles since they do not have physical inventory to manage. Their financial statements may also differ, with a focus on revenue per employee and hourly labor costs rather than cost of goods sold and inventory turnover. Retail businesses, on the other hand, have longer operating cycles as they manage physical inventory and may focus on metrics such as inventory turnover and gross profit margin.

The Most Important Differences Between a Service Business and a Retail