Which of the following statements is correct? The operating cycle is calculated as:

Question

Quizplus · Accepted Answer

The operating cycle represents the time it takes for a company to convert its investment in inventory back into cash. It is calculated as the sum of the average inventory turnover period and the average trade receivables period, minus the average trade payables period.

A) This answer subtracts the average trade payables period twice, which is incorrect. 
B) This answer correctly adds the average inventory turnover period and the average trade receivables period, and subtracts the average trade payables period. 
C) This answer subtracts the average inventory period instead of adding it, which is incorrect. 
D) This answer adds the average trade receivables period twice, which is incorrect.

Which of the Following Statements Is Correct? the Operating Cycle