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What is operating cycle?
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Answer / gurdeep singh
It is the time period involved in the conversion of raw
material/resources into finished goods or services
including the credit period involved for selling
products/services.
In simple language……. let me give you an extreme example
Suppose a business buy raw material on 1st jan and it takes
one month to convert this raw material into finished goods.
On 1st feb good are ready for sale i.e. stocked at
warehouse on 1st march goods are sold and on 1st april
payment is received. Now this revenue will be used to buy
fresh raw material.
The Operating cycle is 3 months….. The time taken to
convert Working capital into revenue.
Correct me if I m wrong ……………….
| Is This Answer Correct ? | 63 Yes | 8 No |
Answer / rajani
The average time between purchasing or acquiring inventory
and receiving cash proceeds from its sale.
| Is This Answer Correct ? | 24 Yes | 2 No |
Answer / ramu
raw material - work in progress - finished goods - sale of
the goods - cash - raw material
| Is This Answer Correct ? | 31 Yes | 12 No |
Answer / n.vanitha
OPERATING CYCLE STRAT WITH CASH ENDS WITH CASH I.E IT START
RAW MATERIAL WITH THE CASH
CASH-RAW MATERIAL-WORKING PROGRESS-FINISHED GOODS-SALES-
DEBTORS-CASH.IT IS OPERATING CYCLE
| Is This Answer Correct ? | 8 Yes | 3 No |
Answer / vipin
Working capital operation cycle is stock turnover + debtor turnover - creditor turnover = company takes an overdraft to finance their business (positive value) or creditors finance their business (negative value) cheers.
| Is This Answer Correct ? | 8 Yes | 3 No |
Answer / rajesh
The average time it takes for a retailer's or
manufacturer's inventory to turn to cash. If a manufacturer
turns its inventory six times per year (every two months)
and allows customers to pay in 30 days, its operating cycle
is approximately three months
| Is This Answer Correct ? | 6 Yes | 3 No |
Answer / umesh shah
operating cycle in Days= # of days raw material in
warehouse+ # of days work in production centre + # of days
finished product is in warehouse + # of days credit given
to customer - # of days Credit received from supplier
| Is This Answer Correct ? | 1 Yes | 9 No |
2. Contingent liabilities should be recorded in the books when; a) It is probable that the future events will occur b) The amount of the liability can be reasonable estimated. c) Both (a) and (b) d) Either (a) or (b)
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