This post addresses the operating and cash cycles.
How are the operating and cash cycles of the firm different? Why are they important?
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The operating cycle shows the amount of time that it takes from when the raw materials are initially purchased by the company until the time it takes for the firm to actually sell the raw materials as a finished product to their customers. The operating cycle is counted by the number of days it takes for this process to take place. If the materials are purchased on January 1st, and then go through all necessary stages of production to be sold, and are then sold on January 20th, the operating cycle is twenty ...
Solution Summary
The solution provides a detailed explanation of how the operating and cash cycles of the firm are different and why they are important.
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