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

Question

Quizplus · Accepted Answer

The operating cycle is the time it takes for a company to purchase, produce, and sell its products, while the cash cycle is the time it takes for a company to convert its investments in inventory and other resources back into cash. The difference between the two is the accounts payable days, which represents the time it takes for a company to pay its suppliers after receiving their products.

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