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The normal operating cycle of a service company includes the following steps :
1. Perform services. 2. Accounts Recievable 3. Get cash
There are no goods involved. Only a service has to be performed, thus no dependencies from suppliers etc.
The operating cycle of a merchandising company has some additional steps
1.Buy inventory 2. Sell inventory 3. Accounts recievable 4. Get cash
The goods have to be ordered from suppliers of wholesalers and stored. Then goods from inventory are sold.
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Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?
Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?
What is the operating cycle of a merchandising business?
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How do components of revenue and expenses differ between a merchandising company and a service enterprise?
Merchandising Companies purchase and sell directly and is ordinarily longer than a service company because of the inventory and its eventual sale lengthen the cycle, which differ merchandising and service companies.
Is the measure of net income for a merchandising company conceptually the same for a service company?
Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.
Is the measurement of net income for a merchandising company conceptually the same as for a service company?
Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.
How can a company improve its operating cycle?
To improve the operating cycle of a company that is required availability of human resources that is really qualified of the company. It requires a team work that can work together.
Is Apple manufacturing company or merchandising company?
Both but mostly merchandising company
Two categories of expenses for merchandising companies are?
C.O.G.S. (Costs of Goods Sold) and Operating Expenses.The normal operating cycle of a service company includes the following steps :1. Perform services. 2. Accounts Receivable 3. Get cashThere are no goods involved. Only a service has to be performed,...
How receivables collection period may affect the operating cycle?
Receivables collection period refers to the number it takes debtors to pay which is about the last part of the operating cycle where the company will generate the required cash to start another cycle. the longer it takes the debtors to pay, the longer the operating cycle becomes however short are the other elements such as raw material conversion cycle, work in progress conversion cycle, marketing and distribution cycle for finished goods. since most companies run their account on accrual basis such that it gives rise to selling goods and services on credit, there will be need to have a good collection policy in place so as to avoid tying down capital in the hands of customers and most importantly to shorten the average collection period to have a shorter operating cycle. the shorter the operating cycle, most especially for merchandising, the better the company's efficiency. Lateef Ismail Adebayo Credit and Marketing Union Bank of Nigeria Plc. +2348035571160.
Is it possible for a firm's cash cycle to be longer than its operating cycle?
No, a firm's cash cycle cannot be longer than its operating cycle. The cash cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable back into cash, while the operating cycle includes the entire duration from acquiring inventory to collecting cash from sales. Since the cash cycle is a subset of the operating cycle, it will always be equal to or shorter than the operating cycle.
What are the following assets MUST a merchandising company have for daily operations?
Merchandising Inventory
Is Proctor and Gamble a merchandising company?
no
