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How to calculate the operating cycle?

Understand the Problem

The question is asking for the method to calculate the operating cycle, which involves understanding and applying specific formulas related to inventory and accounts receivable.

Answer

Inventory Period + Accounts Receivable Period

The final answer is Inventory Period + Accounts Receivable Period

Answer for screen readers

The final answer is Inventory Period + Accounts Receivable Period

More Information

The operating cycle represents the average time it takes for a business to turn its inventory into cash. It's an important measure of operational efficiency.

Tips

Ensure the correct turnover ratios are used when calculating Inventory and Accounts Receivable periods.

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