Net Operating Cycle Solution

STEP 0: Pre-Calculation Summary
Formula Used
Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables)
NOC = ((365/P)*Avgi)+((365/NR)*AAR)
This formula uses 5 Variables
Variables Used
Net Operating Cycle - Net Operating Cycle is a financial metric that measures the time it takes for a company to convert its investments in inventory into cash from sales.
Purchases - Purchases are the things that can be acquired by the payment of money or its equivalent.
Average Inventory - Average Inventory refers to the mean amount of inventory a company holds over a specific period, typically calculated by averaging the beginning and ending inventory levels for that period.
Net Receivables - Net receivables is the total money owed to a company by its customers minus the money owed that will likely never be paid.
Average Accounts Receivables - Average Accounts Receivables is the sum of starting and ending accounts receivable over a time period (such as monthly or quarterly), divided by 2.
STEP 1: Convert Input(s) to Base Unit
Purchases: 25000 --> No Conversion Required
Average Inventory: 2000 --> No Conversion Required
Net Receivables: 785645 --> No Conversion Required
Average Accounts Receivables: 12500 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
NOC = ((365/P)*Avgi)+((365/NR)*AAR) --> ((365/25000)*2000)+((365/785645)*12500)
Evaluating ... ...
NOC = 35.0073302827613
STEP 3: Convert Result to Output's Unit
35.0073302827613 --> No Conversion Required
FINAL ANSWER
35.0073302827613 35.00733 <-- Net Operating Cycle
(Calculation completed in 00.004 seconds)

Credits

Created by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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Satyawati College (DU), New Delhi
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23 Financial Accounting Calculators

DuPont Analysis
Go Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity)
Internal Rate of Return
Go Net Present Value (NPV) = sum(x,0,Number of Periods,((Cashflow at End Period/(1+Internal Rate of Return)^x)))-Initial Investment
Discount Lost
Go Discount Lost = (Discount in Percentage/(100-Discount in Percentage))*(365/(Final Payment Date-Last Discount Date))
Net Operating Cycle
Go Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables)
Annual Equivalent Cost
Go Annual Equivalent Cost = (Asset Price*Discount Rate)/(1-(1+Discount Rate)^-Number of Periods)
Net Present Value
Go Net Present Value (NPV) = sum(x,1,Time period,(Cash Flow/(1+Internal Rate of Return)^x))
Annual Percentage Yield
Go Annual Percentage Yield = (1+(Stated annual interest rate/Compounding Periods))^Compounding Periods-1
Effective Yield
Go Effective Yield = 1+(Nominal Rate/Number of Payments Per Year)^(Number of Payments Per Year)-1
Depletion Charge per Unit
Go Depletion Charge per Unit = (Original Cost-Residual Value)/Total Number of Units Depletion
Value of Stock
Go Value of Stock = Expected Dividend Per Share/(Cost of Capital Equity-Dividend Growth Rate)
EBITDA
Go EBITDA = Earnings Before Interest and Taxes+Depreciation+Amortization
Shareholders' Equity given Share Capital, Retained Earnings and Treasury Shares
Go Total Shareholders' Equity = Share Capital+Retained Earnings-Treasury Shares
Operating Cash Flow
Go Operating Cash Flow = Earnings Before Interest and Taxes+Depreciation-Taxes
Discount Percentage
Go Discount Percentage = ((List Price-Price Paid)/Price Paid)*100
Residual Value
Go Residual Value = (Cost of fixed asset-Scrap Rate)/Lifespan
Long term Debt to Equity ratio
Go Long Term Debt to Equity Ratio = Long Term Debt/Shareholders Fund
EBIT
Go Earnings Before Interest and Taxes = Revenue-Operating Expense
Depletion Expense
Go Depletion Expense = Depletion Charge per Unit*Units Consumed
Shareholders' Equity given Total Assets and Liabilities
Go Total Shareholders' Equity = Total Assets-Total Liabilities
Discount Factor
Go Discount Factor = 1/(1*(1+Discount Rate)^Number of Periods)
Discount given Discount Rate and List Price
Go Discount = Discount Rate*List Price
Discount given List Price and Price Paid
Go Discount = List Price-Price Paid
List Price
Go List Price = Price Paid+Discount

Net Operating Cycle Formula

Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables)
NOC = ((365/P)*Avgi)+((365/NR)*AAR)

What is Net Operating Cycle?

The net operating cycle is a financial metric that measures the time it takes for a company to convert its investments in inventory into cash flow from sales, while also considering the time it takes to pay suppliers. It is calculated by subtracting the average payment period from the sum of the average inventory turnover period and the average collection period. This metric provides insights into the efficiency of a company's working capital management and its ability to generate cash flow from its operations.

How to Calculate Net Operating Cycle?

Net Operating Cycle calculator uses Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables) to calculate the Net Operating Cycle, The Net Operating Cycle formula is defined as a financial metric that measures the time it takes for a company to convert its investments in inventory into cash from sales. Net Operating Cycle is denoted by NOC symbol.

How to calculate Net Operating Cycle using this online calculator? To use this online calculator for Net Operating Cycle, enter Purchases (P), Average Inventory (Avgi), Net Receivables (NR) & Average Accounts Receivables (AAR) and hit the calculate button. Here is how the Net Operating Cycle calculation can be explained with given input values -> 35.00733 = ((365/25000)*2000)+((365/785645)*12500).

FAQ

What is Net Operating Cycle?
The Net Operating Cycle formula is defined as a financial metric that measures the time it takes for a company to convert its investments in inventory into cash from sales and is represented as NOC = ((365/P)*Avgi)+((365/NR)*AAR) or Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables). Purchases are the things that can be acquired by the payment of money or its equivalent, Average Inventory refers to the mean amount of inventory a company holds over a specific period, typically calculated by averaging the beginning and ending inventory levels for that period, Net receivables is the total money owed to a company by its customers minus the money owed that will likely never be paid & Average Accounts Receivables is the sum of starting and ending accounts receivable over a time period (such as monthly or quarterly), divided by 2.
How to calculate Net Operating Cycle?
The Net Operating Cycle formula is defined as a financial metric that measures the time it takes for a company to convert its investments in inventory into cash from sales is calculated using Net Operating Cycle = ((365/Purchases)*Average Inventory)+((365/Net Receivables)*Average Accounts Receivables). To calculate Net Operating Cycle, you need Purchases (P), Average Inventory (Avgi), Net Receivables (NR) & Average Accounts Receivables (AAR). With our tool, you need to enter the respective value for Purchases, Average Inventory, Net Receivables & Average Accounts Receivables and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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