Which one of the following equals the operating cycle?
A)cash cycle plus accounts receivable period
B)inventory period plus the accounts receivable period
C)inventory period plus the accounts payable period
D)accounts payable period minus the cash cycle
E)accounts payable period plus the accounts receivable period

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes for a company to turn its inventory into cash. This involves two periods: the time it takes to sell inventory (inventory period) and the time it takes to collect payment from customers (accounts receivable period). Therefore, option B - inventory period plus the accounts receivable period- is the equivalent of the operating cycle.

Which One of the Following Equals the Operating Cycle