Operating Cycle Concept

Operating cycle concept is used in working capital management of the company. It depicts the operational efficiency of the company, when a company buys raw material from supplier it has to convert that raw material into finished product and then sell it to customer in order to generate cash so that it can buy again raw material. In simple words the time taken to convert raw material into cash by a firm will be its operating cycle, so fir example if company buys raw material and generate cash from sale of that finished good in 75 days then its operating cycle will be 75 days.

0 comments… add one

Leave a Comment

Related pages

characteristics of process costingbenefits of command economydefine substitutes in economicsadvance from customer journal entryunsystematic meaningwhat is leverage ratiosexample of penetration pricingassumptions of a perfectly competitive marketadvantage of dictatorshipdisadvantages of student loansexplain difference between systematic unsystematic riskvostro definitionlifo disadvantagespreliminary expenses meaningperfect competition in economics definitionmarket segmentation advantagesprofibility ratiostrengths and weaknesses of traditional economycompare and contrast socialism and capitalismwajiha meaningfluctuating capital accountcongeneric mergerdisadvantages of mixed economyat par chequesbhel financeadjusting unearned revenuecost accounting fifo methodadvantages of planned economic systemdifference between capital and drawingsadvantages of performance based budgetingcapitalistic economyhorizontal analysis accountingadvantages and disadvantages of international businessskimming strategiesexamples of skimming pricing strategydefine floating exchange ratecheque defprepaid insurance journal entry exampledifference between carriage and freightfeatures of decentralisationtraditional economic system advantages and disadvantagesjournal entry for bank loan with interestdifference between account receivable and account payabledrawbacks of ratio analysisentry for salary payableadvantages and disadvantages of functional organisationfull form of neft and rtgsmarginal costing definition accountingdirect expenses meaningskimming the marketdisadvantages of importingmarket skimming and market penetrationdifferent kinds of factoringdisadvantage of joint ventureaccrued income meaningwhat is the meaning of traditional economyunearned rent revenue adjusting entrydisadvantages of financial accountingbartering system definitiondefine materiality concepteconomic value added advantages and disadvantageshorizontal analysis balance sheetmeaning of devaluation of currencylimitations of zero based budgetingautocratic dictatoradvantages of dematerialisationhigher education advantages and disadvantagesdeferred revenue journal entriescomparison between socialism and capitalismdual aspect concept of accounting with exampleswhat is the difference between accounting and economic profitexample of upsellingmarginal cost in cost accountingfullform of cpidifference between macro and micro economy