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    Increasing Operating Cycle & Decreasing Cash Cycle

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    A firm's Operating cycle is increasing and the Cash cycle is decreasing. What are some of the explanations of what is going on with the company?

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    Solution Preview

    Let us understand the basics first:
    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 ...

    Solution Summary

    279 words describe expectations one might have when a company is experiencing an increasing operating cycle and decreasing cash cycle simultaneously.