Question

A merchandiser’s operating cycle is also referred to as the Cash-to-Cash cycle. True or false.

Answer 1

The statement is True.

A typical operating cycle of a merchandiser starts with making the cash available for merchandise purchase, followed by purchasing the merchandise, stocking the inventory, selling  the inventory to customers and ends with collecting the cash ( immediate collection for cash sales and collcetion of accounts receivable for credit sale) . Therefore , the operating cycle starts with making provision for cash for purchase and ends with the collection of cash from customers. So the merchandiser's operating cycle can be referred to as the Cash-to-Cash cycle.