Purchase Solution

Operating Cycle Importance

Not what you're looking for?

Ask Custom Question

What is an operating cycle? Why is it important? Please note, if you are using any source please provide references.

Purchase this Solution
Solution Summary

The operating cycle is discussed.

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 ...

Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Introduction to Finance

This quiz test introductory finance topics.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

View More Free Quizzes
Related BrainMass Solutions

  • Importance of the operating cycle

    196978 Define the importance of the operating cycle and how it can be improved. What is an operating cycle? Why is it important? What are some methods your organization uses to improve the operating cycle?

  • Managing the cash conversion

    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 outstanding).

  • Auditing review questions

    Gross operating cycle. d. Net operating cycle. e. Accounts payable turnover. That is the "net operating cycle." The gross operating cycle would include the time to pay vendors (AP turnover). Pick D. 31.

  • Liabilities, Balance Sheet, and Full Disclosure

    For example, current liabilities are expected to be paid within the current operating cycle. Hence, segregating it from non-current liabilities will allow analysis on whether the company can meet this short term obligation when it comes due.

  • Working capital managements, financial planning, discounts, APR

    • Discuss the importance and main avenues of cash management. Elaborate on the company's cash cycle, and how it differs from its operating cycle.

  • XieCorp- Cash Conversion Cycle

    (b) Calculate the firm's operating cycle (OC).

  • Increasing Operating Cycle & Decreasing Cash Cycle

    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 outstanding).

  • The operating cycle and cost cycle

    Operating Cycle (OC) = Inventory Conversion Period + Receivables Conversion Period Cash Conversion Cycle (CCC) = Operating Cycle (OC) - Payables Deferral Period This provides the steps to calculate the The operating cycle and cost cycle

  • Periodic reporting and the time period principle

    Time period principle: Time period principle assumes that the operating cycle of the company can be divided into distinct accounting periods (months, quarter, half yearly, yearly) of relatively short length for which the accounting information can be

View More Related Solutions