Question

An operating cycle is the time between the ______.

Options

• Production and sales.

• Procuring of raw material and production of goods.

• Financing and selling of products.

• Acquiring of raw material for processing and its realisation into Cash and Cash Equivalents.

Answer 1

An operating cycle is the time between the acquiring of raw material for processing and its realisation into cash and cash equivalents.

Explanation:

As defined under Schedule III of the Companies Act, 2013, an operating cycle represents the entire time duration that elapses between the initial purchase of raw materials or assets for processing and the final moment those goods are sold and converted back into cash or cash equivalents. The other options only describe individual fragments of corporate activity, such as manufacturing or selling, whereas the operating cycle covers the complete end-to-end, cash-to-cash loop of a business.