Essentials of Corporate Finance


Sources and Uses of Cash - continued



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Ross FCF 10Ce Ch18
Ross FCF 10Ce Ch18

Sources and Uses of Cash - continued

  • 18-

The Operating Cycle

  • Operating cycle – time between purchasing the inventory and collecting the cash
  • Inventory period – time required to purchase and sell the inventory
  • Accounts receivable period – time to collect on credit sales
  • Operating cycle = inventory period + accounts receivable period
  • 18-

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