The operating cycle is _____.
A)the same as the cash cycle
B)not calculated with items from the income statement
C)the length of time it takes to purchase inventory and then convert the sale of the product/inventory into cash
D)generally less than the cash cycle

Question

Quizplus · Accepted Answer

The operating cycle is the length of time it takes to purchase inventory and then convert the sale of the product/inventory into cash. It includes both the time it takes to sell inventory and the time it takes to collect cash from those sales. The cash cycle, on the other hand, only looks at the time it takes to convert inventory into cash. The operating cycle is calculated using items from both the income statement and the balance sheet.

The Operating Cycle Is _____