A firm's operating cycle is equal to its:
A)Only statement I is correct.
B)Only statement II is correct
C)Both statements I and II are correct.
D)Neither statement I nor II is correct.

Question

Quizplus · Accepted Answer

Statement I is correct as the operating cycle refers to the time taken by a company to convert its inventories into cash.
Statement II is incorrect as the liquidity ratio measures a company's ability to meet its short-term obligations, and does not take into account the operating cycle.

A Firm's Operating Cycle Is Equal to Its