Last answered:

16 Mar 2023

Posted on:

09 Mar 2023


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)
Posted on:

16 Mar 2023



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.


The 365 Team

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