{"id":2358,"date":"2023-08-31T10:54:46","date_gmt":"2023-08-31T16:54:46","guid":{"rendered":"https:\/\/agromed.mx\/portal\/?p=2358"},"modified":"2025-09-16T11:45:25","modified_gmt":"2025-09-16T17:45:25","slug":"operating-cycle-and-its-functions-working-capital-2","status":"publish","type":"post","link":"https:\/\/agromed.mx\/portal\/index.php\/2023\/08\/31\/operating-cycle-and-its-functions-working-capital-2\/","title":{"rendered":"Operating Cycle and Its Functions Working Capital"},"content":{"rendered":"

\"operating<\/p>\n

The operating cycle is a concept similar to the net operating cycle or cash cycle concept, however, there is a small difference between the two. The operating cycle of the business refers to the length of time from the initial purchase of raw material to the time cash is received from the sale of the finished goods. In this article, we will cover in detail about cash operating cycle in accounting. Before going further, let\u2019s understand the overview of the cash operating cycle as well as the concept of working capital management. One of the primary challenges is dealing with extended payment terms from customers.<\/p>\n<\/p>\n

Order to Cash Solution<\/h2>\n<\/p>\n

The formula for calculating the operating cycle is the sum of days inventory outstanding (DIO) and days sales outstanding (DSO). Typically, a shorter operating cycle means a company converts inventory and receivables into cash more quickly. As a result, your business has enhanced liquidity, can meet its short-term obligations, and can invest in growth opportunities. The difference between the two formulas lies in NOC subtracting the accounts payable period.<\/p>\n<\/p>\n