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Home > QFINANCE Dictionary > Definition of operating cycle

Definition of

operating cycle

Operations & Production

process between investment and income from product the cycle of business activity in which cash is used to buy resources that are converted into products or services and then sold for cash

Recommended Further Reading (Term count)
  • Capital Structure: Implications
    by John C. Groth
    A tax environment that allows for the deduction of interest charges, but not the deduction of dividends, results in an optimal capital structure for a company. The optimal structure results in a lower weighted cost of capital (WCOC) for reasons examined in the article, Capital Structure: Perspectives. This article examines the implications of capital structure, and some of the key factors that influence capital structure.
  • Working Capital
    The funds that are readily available to operate a business. Working capital comprises the total net current assets of a business, which are its inventory, debtors, and cash—minus its creditors.
  • Defining Assets
    Collectively, the value of all the resources a company uses to conduct business and generate profits. Examples of assets are cash, marketable securities, accounts and notes receivable, inventory of merchandise, real estate, machinery and office equipment, natural resources, and intangibles such as patents, legal claims and agreements, and negotiated rights.
  • Working Capital Cycle
    The working capital cycle measures the amount of time that elapses between the moment when your business begins investing money in a product or service, and the moment the business receives payment for that product or service. This doesn’t necessarily begin when you manufacture a product—businesses often invest money in products when they hire people to produce goods, or when they buy raw materials.

Definitions of ’operating cycle’ and meaning of ’operating cycle’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’operating cycle’ and other financial terms with our online QFINANCE Financial Dictionary.

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