Operating cycle: Difference between revisions
WikiSysopIG (talk | contribs) Created page with "The '''Operating cycle''' is the period required for a business to acquire or produce goods or services, sell them, and collect the resulting cash from customers. A simplified representation is: <math> \text{Operating Cycle} = \text{Inventory Conversion Period} + \text{Receivables Collection Period} </math> where: * <math>\text{Inventory Conversion Period}</math> = time required to acquire or produce inventory and convert it into sales; * <math>\text{Receivables..." |
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\text{More Capital Tied Up in Operations} | \text{More Capital Tied Up in Operations} | ||
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==Operating cycle and current liabilities== | ==Operating cycle and current liabilities== | ||
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\text{Timing of Operating Asset and Liability Conversion} | \text{Timing of Operating Asset and Liability Conversion} | ||
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The precise classification criteria depend on the applicable accounting standards. | The precise classification criteria depend on the applicable accounting standards. | ||