a. What is the difference between a firm's cash cycle and its operating cycle? Select all that apply
A firm's cash cycle is the average length of time from when a firm pays cash for its inventory to when it receives cash from the sale of that inventory? (or the end product that the firm produced with the inventory).
B. If a firm were to pay cash for its inventory, rather than buying the inventory on credit, the cash cycle and the operating cycle of the firm would be identical. In most cases, however, firms buy their inventory on credit, so the cash cycle is longer than the operating cycle of the firm.
C. firm's operating cycle is calculated as the average number of days between the purchase of the initial inventory and the sale of the end product plus the average number of days it takes the firm's customers to pay for the inventory they purchase.
D. A firm's operating cycle is the average length of time between when a firm purchases its inventory and when the firm receives cash from the sale of the inventory. E. The cash cycle is calculated as the average number of days between the purchase of the initial inventory and the sale of the end product plus the average number of days it takes the firm's customers to pay cash for the inventory they purchase minus the average number of days the firm takes to pay its suppliers for the inventory. F. If a firm were to pay cash for its inventory, rather than buying the inventory on credit, the cash cycle and the operating cycle of the firm would be identical. In most cases, however, firms buy their inventory on credit, so the cash cycle is shorter than the operating cycle of the firm.