Question

• We can estimate working capital by multiplying with the the cost of production Answer A. Operating cycle B. Working capital C. Temporary working capital D. Aggressive approach​

Answer 1

Answer:

Operating cycle method for estimating working capital is based on the duration of the operating cycle. The longer the period of the cycle, the bigger will be the working capital requirements. Operating cycle means the cycle of raw material to work in progress to finished goods to accounts payable and finally to cash. Operating cycle time is the time taken starting from raw material purchases to its conversion into cash.

Explanation: