Asked by Adriana PreciousLatina on Jul 14, 2024
Verified
What is the operating cycle? Describe a business entity with an operating cycle of less than six months and a business with an operating cycle of more than one year.
Operating Cycle
The average time period it takes for a business to convert its inventory into cash through sales.
Business Entity
An organization that engages in economic activities, recognized as a separate legal entity from its owners.
Less than Six Months
A term used to describe a period or duration that does not exceed six months.
- Describe the operating cycle and identify businesses with different operating cycle lengths.
Verified Answer
NC
Nicolette CoriglianoJul 19, 2024
Final Answer :
The operating cycle is the time that elapses from the cash payment for inventory to the cash collection form customers from sale of the inventory.A restaurant and a grocery store would be examples of businesses with operating cycles of less than six months.An airplane manufacturer and a winery would be examples of businesses with operating cycles of more than one year.
Learning Objectives
- Describe the operating cycle and identify businesses with different operating cycle lengths.