The difference between the operating cycle and the cash conversion cycle is that the cash conversion cycle considers that all purchases by the company are not made in cash at the time of purchase.

Question

Quizplus · Accepted Answer

The cash conversion cycle accounts for the time lag between when a company pays its suppliers for inventory and when it receives cash from sales, considering not all purchases are made in cash immediately, unlike the operating cycle which does not specifically account for this aspect.

The Difference Between the Operating Cycle and the Cash Conversion