Question

For the purpose of classifying liabilities as current or​ noncurrent, the term operating cycle refers to

Answer 1

The right answer to this question is B) The period between the purchase of goods and the conversion of this merchandise back to cash.

Because current liabilities or non-current liabilities are influenced by income from the company.

Further explanation

the operational cycle refers to the days that are required for a company to receive inventory, sell that inventory and collect cash from the sale of that inventory. This cycle plays an important role in determining the efficiency of business performance.

The operating cycle utilizes receivables and inventory. This is often compared to the cash conversion cycle because it uses the same parts.

However, what makes them different is that the operating cycle analyzes these components from the perspective of how well the company manages operational capital, rather than the impact these components have on cash.

This is called the operation cycle because the process of producing/buying inventory, selling it, recovering customer's cash, and using that cash to buy/produce inventory, is repeated during the company's operations.

The operating cycle is useful for estimating the amount of working capital that a company needs to maintain or grow its business. Another useful measure used to evaluate the efficiency of a company's operations is the cash cycle.

Learn more

Operation cycle brainly.com/question/14249612, brainly.com/question/13188114

Details

Class: High School

Subject: Business

Keyword: operating cycle

Answer 2

Answer: Option B

             

Explanation: In simple words, operating cycle refers to the time taken by an organisation from converting its initial purchase of inventory to the cash payment received from selling that inventory. In other words, it is the cycle from initial outlay of cash to final inflow of cash.

Thus, from the above we can conclude that the correct option is B.