Respuesta :
The time it takes for a business to purchase items, sell them, and get payment for those sales is referred to as an operating cycle.
It is, in other words, the time it takes for a business to convert its inventories into cash. Depending on the sector, an operational cycle can be any length. The following components make up the operating cycle: includes the average collection period (365 days/accounts receivable turnover ratio) plus the days' sales in inventory (365 days/inventory turnover ratio). The amount of days that pass between the time you buy goods and the time customers pay for it is known as the operating cycle. The amount of days between when you purchase inventory and when you get payment from your clients is known as the cash conversion cycle. The accounts receivable, inventory, and accounts payable cycles are examined in terms of days by the operational cycle. In other words, the average number of days it takes to collect an account is used to examine accounts receivable. The days needed for a business to receive inventory, sell the goods, and collect money from the sale of the inventory are referred to as an operating cycle. This cycle is crucial in evaluating how effectively a business operates. It is the period of time between paying suppliers in cash and collecting payment from customers. The operational cycle would be lengthened by which of the following? easing loan conditions and giving clients more time to pay.
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