The Operating Cycle of a Company

question 106

Multiple Choice

The operating cycle of a company:

• A)Must be less than one year.
• B)Is usually greater than one year.
• C)Is the time it takes to purchase inventory,sell inventory,and collect cash from the sale.
• D)Is the time it takes to acquire a loan,pay the interest,and retire the loan by paying the creditor in full.

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Definitions:

Internal Growth Rate

The internal growth rate is a measure of an organization's ability to increase its sales and profit without issuing more stock or incurring new debt.

Full Capacity

A term referring to the maximum level of production or output that a facility can achieve under normal operating conditions.

Notes Payable

A written agreement where a borrower agrees to pay back a specified sum of money to a lender at a future date.

Accounts Receivable

Funds that a company is due to receive from its debtors for products or services that have been provided but are still outstanding in payment.