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With a simple equation, explain working capital cycle?

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Question added by Abdulrasheed olabode , Senior Internal Auditor , IHS TOWERS LIMITED
Date Posted: 2017/03/04
Soliman Abd  ALmalak Gendy
by Soliman Abd ALmalak Gendy , مدير ادارة مراقبة حسابات , الجهاز المركزى للمحاسبات

Working capital cycle is the amount of time it takes to turn the net current . assets and current liabilities into cash _It is a measure of both a company''s efficiency and its short_term financial health

Abdulrasheed olabode
by Abdulrasheed olabode , Senior Internal Auditor , IHS TOWERS LIMITED

Working capital cycle is also known as operating cycle. it measures the number of days it takes to convert current asset and current liabilities into cash.

 

Working capital cycle = {(average usage of raw material/purchases) + (average W.I.P/ Cost of production) + (avegrage Finished goods/cost of sales) + (average Debtors/sales) - (average Creditors/Purchases)} * 365 days

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