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Define and describe the difference between the operating cycle and cash conversion cycle for a...

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Define and describe the difference between the operating cycle and cash conversion cycle for a typical manufacturing company.

Manufacturing Company

A company involved in the production of goods from raw materials and then selling them to the retailers or customers is called a manufacturing company. It produces something of more value from the input of raw materials and other inputs like labor, overhead costs, etc.

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The process of cash measured in days from converting cash to inventory and inventory back to cash is called the cash conversion cycle. Whereas,...

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Operating Cycle & Cash Cycle: Definition & Calculations

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Chapter 17 / Lesson 2
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The operating cycle and cash conversion cycle are both tools to evaluate the timeline of when a business will become profitable. Explore the calculations of each, and identify their importance to a business.


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