Question

The operating cycle is the period from inventory purchase until the receipt of cash. Different company characteristics generally define the type of operating cycle that a firm experiences. Five different types of companies are: 1) A convenience store, 2) A furniture store, 3) A car manufacturer, 4) A bookstore, and 5) An oil-field drilling equipment company. Of the companies listed, select the one you believe would have: 1) The longest operating cycle, 2) The shortest operating cycle, 3) The most unpredictable operating cycle, and 4) The operating cycle most susceptible to changes in payment terms.

Answer 1

1) The longest operating cycle will be oil field drilling equipment company because in this type industry operating cycle can go upto125 days

2) Shortest operating cycle in comparison to others convenience store has shortest operating cycle

3) the most unpredictable operating cycle is of oil-field drilling equipment since the oil market is most unpredictable & and u don't know where oil is.

4) The operating cycle most susceptible to changes in payment terms is a car manufacturer since a car manufactures buys multiple car equipment from multiple sources