To trace cash flows through the firm's operations, we must measure this. It is the time necessary to acquire raw materials, turn them into finished goods, sell them, and receive payment for them.
A) cash cycle
B) operating cycle
C) transaction cycle
D) production cycle

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes for a firm to acquire inventory, sell the inventory, and collect payment from customers. It includes both the production cycle (the time it takes to turn raw materials into finished goods) and the cash cycle (the time it takes to collect payment from customers). Therefore, the operating cycle is the best choice for tracing cash flows through the firm's operations.

To Trace Cash Flows Through the Firm's Operations, We Must