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The operating cycle and cost cycle

Income statement for a company in 20X1, the cost of goods sold and the credir sales are $200million and $240 million, respectively. The following data are from its balance sheets. Inventory Dec. 31, 20X1 $40 million, Dec. 31, 20X2 $60 million. Accounts receivable $30 million Dec. 31, 20X1, $50 million Dec. 31, 2003. Accounts payable 10 million Dec. 31, 20X1 and 30 million Dec. 31, 2002. A. How many days is the operating cycle? B. How many days is the cash cycle?

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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 ...

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This provides the steps to calculate the The operating cycle and cost cycle