Operating cycle

The average time intervening between the acquisition of materials or services and the final cash realization from those acquisitions.

Similar financial terms

Annual fund operating expenses
For investment companies, the management fee and "other expenses," including the expenses for maintaining shareholder records, providing shareholders with financial statements, and providing custodial and accounting services. For 12b-1 funds, selling and marketing costs are included.

Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as how much inventory to order and whether to offer cash terms or credit terms to customers.

Operating risk
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk.

Operating leverage
Fixed operating costs, so-called because they accentuate variations in profits.

Operating lease
Short-term, cancelable lease. A type of lease in which the period of contract is less than the life of the equipment and the lessor pays all maintenance and servicing costs.

Operating profit margin
The ratio of operating margin to net sales.

Operating exposure
Degree to which exchange rate changes, in combination with price changes, will alter a company's future operating cash flows.

Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from operations, not counting capital spending or working capital requirements.

Net operating margin
The ratio of net operating income to net sales.

Net operating losses
Losses that a firm can take advantage of to reduce taxes.

Economic cycle
The economic cycle are predictable long-term pattern changes in national income. As for business cycles, the economic cycle has four (similar) stages:
- expansion
- prosperity
- contraction
- recession
After a recession, an expansion can start again. Some economists believe that major stock price movement patterns precede the stages of the economic cycle.

Business cycles
The patterns of fluctuation in growth patterns experienced by business caused by overall econimoc and financial trends, competitive forces and the nature of supply and demand. Cycles are predictable in patterns but not always in durations.

Replacement cycle
The frequency with which an asset is replaced by an equivalent asset.

Product cycle
The time it takes to bring new and/or improved products to market.

Market cycle
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the highest point or 15% above the lowest point (ending a down market). The dates of the last market cycle are: 12/04/87 to 10/11/90 (low to low).

Business cycle
Repetitive cycles of economic expansion and recession.

Cash conversion cycle
The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable.

Cash cycle
In general, the time between cash disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable payment period.

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Negative covenant

A bond covenant that limits or prohibits altogether certain actions unless the bondholders agree.

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