operating cycle
The "operating cycle" is crucial for understanding a company's efficiency in managing its inventory and cash flow.
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Definition
B2Business
(general)The time it takes for a business to buy inventory, sell products, and collect cash from sales.
Example
- A shorter operating cycle can indicate better cash flow management.
- The company improved its operating cycle by streamlining inventory processes.
C1Accounting
(technical)The period required to convert investments in inventory into cash flows from sales.
Example
- Accountants often analyze the operating cycle to assess liquidity.
- The operating cycle includes both the inventory and accounts receivable periods.
Similar
Terms that have similar or relatively close meanings to "operating cycle":
operating timeoperational service periodtime cycleoperating expense