An approximation of the operating cycle can be determined from the receivable liquidity figures and the inventory liquidity figures.

Question

Quizplus · Accepted Answer

The receivable liquidity figures and inventory liquidity figures are key components in determining the operating cycle. The operating cycle refers to the time it takes for a company to convert its inventory into cash. By analyzing these two liquidity figures, an estimate of the operating cycle can be calculated.

An Approximation of the Operating Cycle Can Be Determined from the Receivable