With a simple equation, explain working capital cycle?

Working capital cycle is the amount of time it takes to turn the net current . assets and current liabilities into cash _It is a measure of both a company''s efficiency and its short_term financial health

Working capital cycle is also known as operating cycle. it measures the number of days it takes to convert current asset and current liabilities into cash.

 

Working capital cycle = {(average usage of raw material/purchases) + (average W.I.P/ Cost of production) + (avegrage Finished goods/cost of sales) + (average Debtors/sales) - (average Creditors/Purchases)} * 365 days