Question

    In working capital management, the period of continuing

    flow of cash to suppliers, to inventories, to accounts receivable and back into cash is known as:
    A Money back cycle Correct Answer Incorrect Answer
    B Operating cycle Correct Answer Incorrect Answer
    C Working capital cycle Correct Answer Incorrect Answer
    D Current cycle Correct Answer Incorrect Answer

    Solution

    In working capital management, the period of continuing flow of cash to suppliers, to inventories, to accounts receivable, and back into cash is known as the: Operating Cycle The operating cycle is a crucial concept in working capital management, representing the time it takes for a company to convert its resources, such as cash, into inventory, sell that inventory to customers on credit, and ultimately collect the accounts receivable back in cash. It involves the entire process of converting raw materials into finished goods, selling them, and receiving payment. The length of the operating cycle can significantly impact a company's working capital needs and overall liquidity.

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