Which of the following equations gives the amount of operating cycle where, R stands for raw material storage period W for work in progress holding period F for finished goods storage period D for receivables (debtors) collection period C for credit period allowed by suppliers (creditors)?

The correct answer is: A. R + W + F + D – C

The operating cycle is the length of time it takes a company to convert its raw materials into finished goods, sell those goods, and collect the cash from the sale. It is calculated as follows:

Operating cycle = Raw material storage period + Work in progress holding period + Finished goods storage period + Receivables (debtors) collection period – Credit period allowed by suppliers (creditors)

Option A is the only option that includes all of these terms. Option B does not include the credit period allowed by suppliers, which is a necessary component of the operating cycle. Option C does not include the finished goods storage period, which is also a necessary component of the operating cycle. Option D does not include the receivables (debtors) collection period, which is also a necessary component of the operating cycle.

The operating cycle is an important measure of a company’s efficiency. A shorter operating cycle indicates that a company is able to convert its raw materials into finished goods and sell them more quickly, which can lead to higher profits. A longer operating cycle indicates that a company is not as efficient in its operations, which can lead to lower profits.