Net Trading Cycle
Hello Ned . Is Net Trading Cycle representing a period of time ? the term speaks for that meaning , and by considering that , why did u explain it in terms of amount of money the company owes Suppliers and the amount of money the company owns ??
1 answers ( 0 marked as helpful)
Hi,
the net trading cycle shows how long the cash is tied up in a company's operations.
It is closely related to the accounts receivable from clients (AR) and accounts payable to suppliers (AP) at a given time.
However, based on AR, AP, and inventory balances, you need to calculate the relevant "days" ratios, which determine the net trading cycle.
I hope this helps.
Best,
The 365 Team