The Operating Cycle The time it takes to receive inventory,sell it, and collect on the receivables generated from the sale of the inventory Operating cycle inventory period accounts receivable period Inventory period time inventory sits on the shelf Accounts receivable period time it takes to collect on receivables4 The Operating Cycle n The time it takes to receive inventory, sell it, and collect on the receivables generated from the sale of the inventory n Operating cycle = inventory period + accounts receivable period q Inventory period = time inventory sits on the shelf q Accounts receivable period = time it takes to collect on receivables