An operating cycle is the time it takes for a company to convert its investments in inventory back into cash through sales and then back into inventory through purchases. Understanding the operating cycle is crucial for businesses to manage their working capital efficiently and optimize their cash flow.

D

An operating cycle begins and ends with cash. It goes through the full cycle of buying inventory, converting the inventory, generating a receivable and finally turning the receivable into cash.

An operating cycle refers to the time it takes for a company to convert its cash into inventory, sell the inventory, and collect the resulting receivables. It represents the period starting from when a company commits its cash for purchasing goods or services until the collection of receivables generated from the sale of those goods or services.

The correct answer is D. the circle of time from the commitment of cash for purchases until the collection of receivables resulting from the sale of goods or services.

Option A is incorrect because it only considers the time frame from the purchase of goods or services to the generation of receivables. It does not include the entire cycle, which involves converting cash into inventory and selling the inventory.

Option B is incorrect because the operating cycle is not specifically related to any individual product line. It encompasses the overall process of purchasing, selling, and collecting receivables for the company's goods or services.

Option C is incorrect because the operating cycle is not always one full fiscal year. The length of the operating cycle can vary depending on the nature of the business and the industry in which it operates. Some industries may have shorter operating cycles, while others may have longer ones.

In summary, the operating cycle represents the entire circle of time from the commitment of cash for purchases until the collection of receivables resulting from the sale of goods or services. It is an important measure for understanding the efficiency of a company's operations and cash conversion cycle.