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Name: Operating cycle is a measure of the operating efficiency and working capital management of a company. A short operating cycle is good as it tells that the company's cash is tied up for a shorter Operating cycle is the number of days a company takes in realizing its inventories in cash. It equals the time taken in selling inventories plus the time taken in recovering cash from trade receivables. It is called operating cycle because this process of producing/purchasing inventories, selling them, recovering cash from customers, using that cash to purchase/produce inventories and so on is repeated as long as the company is in operations. Example: Cost of revenue Inventories as at 31 January 2013 Inventories as at 31 January 2012 Average inventories Accounts receivable as at 31 January 2013 Accounts receivable as at 31 January 2012 Average accounts receivable USD in million 469,162 352,488 43,803 40,714 42,259 6,768 5,937 6,353 Walmart Stores Inc. (NYSE: WMT) is all about inventories. Use the information above to find its operating cycle assuming all sales are cash sales. How many days does it take WMT to sell its inventory? How many days does it take WMT to recover its cash from AR? How many days is the WMT operating cycle? You can use cost of revenue as approximate figure for purchases (i.e. no need to adjust it for changes in inventories)

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