The difference between a firm's operating cycle and its cash cycle is
A)its accounts receivable days.
B)its inventory days.
C)its accounts payable days.
D)There is no difference between the cash and operating cycles.

Question

Quizplus · Accepted Answer

The difference between a firm's operating cycle and its cash cycle is its accounts payable days. The operating cycle measures the time from acquiring inventory to collecting cash from sales, while the cash cycle subtracts the period the company is able to delay payment of its own purchases (accounts payable days), reflecting the time the company's cash is tied up.

The Difference Between a Firm's Operating Cycle and Its Cash