Define operating cycle and long and short operating cycle? Use of operating cycle? Can someone give me assistance on these questions??   Posted Date: 2/14/2013 12:21:50 AM | Location : United States

Definition of Operating Cycle: The operating cycle is the amount of time it takes for a company to turn cash used to buy inventory into cash once again. This number is evaluated by adding the age of inventory (the number of days that inventory is held prior to sale) with the collection period (the number of days needed to collect receivables). A company with a short operating cycle is able to quickly recover its investment. A corporation with a long operating cycle will have less cash available to meet any short-term requirements, which can result in increased borrowing and interest expense. Posted by Tom | Posted Date: 2/14/2013 12:22:27 AM

Your posts are moderated

Write your message here..

Related Questions

Convertible bonds Basics of Convertible Bonds The provision of conversion in a corporate bond entitles the bondholder the right to convert the bond into a predetermined numbe

Start-up financing Start-Up Financing Capital provided to companies which have been in operation for less than one year to facilitate all phases of bringing their product to m

Prepare monetary statements using accoun... Entity A is significantly smaller than B in terms of revenue and would not impact LOP's revenue to the same extent. However A earns a noticeably better gross pr

Differentiate between a bull and a bear ... Question 1: a) Describe fully why and how government intervenes in the foreign exchange market. b) "Changes in the equilibrium exchange rate between a pa

How are financing costs capital budgetin... How are financing costs generally incorporated into the capital budgeting analysis process? Financing costs are typically captured in the discount or hurdle

Compare and contrast mutual and stockhol... Compare and contrast mutual and stockholder-owned savings and loan associations. A few savings and loan associations are owned by stockholders, just like com

Explain the financial desirability of bu... BURLEY PLC Financial desirability In a real-terms analysis the real rate of return necessary by shareholders has to be used. This is found as follows