A company's operating cycle, or cash conversion cycle, shows the length of time it takes a company to buy inventory, convert it into sales and collect the "accounts receivable" revenue from the sales.

Money is tied up in inventory until it can be sold. As a result, cash invested in the inventory is not available for alternative uses. Maintaining a short operating cycle and cash conversion cycle are ...

Failure to manage working capital leads a firm into bankruptcy. Operating Cycle (OC) is a tool that helps firms avoid such trouble. Let us look at the computation of OC along with its inference rule.