What is cash operating cycle?

The cash operating cycle is also called the working capital cycle. It is the average time of one cycle of business operations from the time that the supplier is paid for the resource they supply to the time that cash is received from customers for goods (or services) that the entity makes (or provide) with those resources.

It can also be explained as the length of time between the firm’s purchase of inventory and the receipt of cash receivable. It is the time required for the business to turn purchases into cash receipts from customers.

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