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Opertaing cycle

23 May 2012

Hi,

I found the following formula for computing Operating Cycle as per revised schedule VI in a book:

OPERATING CYCLE
OPERATING CYCLE
	PARTICULARS	Months
	Average length of Milestone
Add	Average billing period
Add	Average collection period
	Total	-

Does anyone have a different formula or any objections to this one?

Your views are welcome...

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5 Replies

Sameer (EXPERT) (173 Points)
Replied 23 May 2012

HELLO PRIYADARSHINI,IN WHICH BOOK THIS TYP OF FORMULA IS GIVEN,

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Sameer (EXPERT) (173 Points)
Replied 23 May 2012

HELLO PRIYADARSHINI,IN WHICH BOOK THIS TYP OF FORMULA IS GIVEN,

CA Priyaadarshini (CA) (105 Points)
Replied 24 May 2012

I got this from a book published by taxmann, sameer..

CA Priyaadarshini (CA) (105 Points)
Replied 24 May 2012

I got this from a book published by taxmann, sameer..

Venkateswara Rao Sapare (Accountant) (1500 Points)
Replied 24 May 2012

For the purpose of Schedule VI, ‘Operating Cycle’ stands normally for a period of less than or equal to coming 12 months.

Sometimes, ‘Operating Cycle’ assumption ends by the end of coming Financial year.

If the nature of business Products/Services needs more that 12-months period to get matured ( by receiving receipts / by paying payments ) that period is considered as an ‘Operating Cycle’ in such specific situations. There are this sort of instances, no doubt.