Describe the operating cycle and the cash cycle.
Not what you're looking for?
Describe the operating cycle and the cash cycle. What are the differences between them?
When you analyze a company's financial health, what kind of ratios would you review? (please list top 3 financial ratios you would consider the most important and which would provide you with a clear idea on the financial status of the company you're trying to analyze)
Purchase this Solution
Solution Summary
The solution describes the operating cycles and the cash cycles.
Solution Preview
Operating Cycle is defined as the time duration, which the firm requires to manufacture and sell the product and collect cash. Thus operating cycle refers to the acquisition of resources, conversion of raw materials into work-in-process into finished goods, conversion of finished goods into sales and collection of sales.
Larger is the operating cycle, larger will be the investment in current assets.
In practice, firms are acquire resources on credit. To that extent, firm's need to raise working finance is reduced. Net Operating Cycle is used for the difference between operating cycle (or gross operating cycle) and the payment deferral period (or the period for which creditors remain ...
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Introduction to Finance
This quiz test introductory finance topics.
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations