Operating Cycle Operating Cycle is the time taken for the entire Procure to Pay (Purchase) and Order to Cash (Sale) process to complete, with respect to goods and services and money received for the same. Operating Cycle is used to determine the funds required to finance operations of a business. Operating Cycle may be considered the sum of the average sale period and average collection period Operating Cycle = Average Sale Period + Average Collection Period To Compute: Company’s operating cycle.

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Chapter 14, Problem 11F15

To determine

Concept Introduction:

Operating Cycle

Operating Cycle is the time taken for the entire Procure to Pay (Purchase) and Order to Cash (Sale) process to complete, with respect to goods and services and money received for the same.
Operating Cycle is used to determine the funds required to finance operations of a business.
Operating Cycle may be considered the sum of the average sale period and average collection period

Operating Cycle = Average Sale Period + Average Collection Period

To Compute:

Company’s operating cycle.

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