The operating cycle is composed of the inventory period and the accounts receivable period.
The operating cycle refers to the timeframe which a business takes to procure its inventories, to complete the sale of these inventories, and to receive cash from their sale. It consists of the inventory period and the accounts receivable period.
The inventory period refers to the number of days in which an inventory sits in storage before it is sold off. The accounts receivable period indicates the time taken to receive cash from the sale of inventories.
The operating cycle is an indicator of the operating efficiency of a business. A shorter cycle indicates more efficiency.
To learn more about operating cycle :
brainly.com/question/15061602
#SPJ1
