The formula (Inventory period + accounts receivable period) correctly deﬁnes the operating cycle.

Question

Quizplus · Accepted Answer

The operating cycle is the time required to convert inventory into cash. This involves two components: the inventory period (time inventory is held before being sold) and the accounts receivable period (time it takes to collect payments from customers after a sale). Adding these two periods together accurately represents the operating cycle.

The Formula (Inventory Period + Accounts Receivable Period) Correctly Deﬁnes