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Cash operating cycle

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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February 25, 2021 at 6:00 pm #611709
huda131
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- Topics: 8
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Sir could u explain how increase in cash operating cycle decrease the profitability
February 26, 2021 at 7:42 am #611748
John Moffat
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A higher operating cycle means the level of working capital is higher. This means they will be borrowing more in order to finance it, which means more interest payable, which in turn means lower profits.
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