Arrange the following sequentially with respect to the operating cycle of a manufacturing firm:

(A) Payables Deferral Period

(B) Finished Goods Conversion Period

(C) Raw Material Conversion Period

(D) Receivables Conversion Period

(E) Work-in-progress Conversion Period

Choose the correct answer from the options given below:

Correct option is B

The operating cycle of a manufacturing firm represents the time taken from the purchase of raw materials to the collection of receivables. The correct sequence is:
1. (C) Raw Material Conversion Period:
· Time taken to convert raw materials into work-in-progress.
2. (E) Work-in-progress Conversion Period:
· Time taken to convert work-in-progress into finished goods.
3. (B) Finished Goods Conversion Period:
· Time taken to convert finished goods into sales.
4. (D) Receivables Conversion Period:
· Time taken to collect payments from customers after the sale.
5. (A) Payables Deferral Period:
· Time for the firm to pay its suppliers after purchasing raw materials.
Information Booster:
The operating cycle formula:

Additional Knowledge:
6. A shorter operating cycle indicates better working capital management.
7. Efficient inventory management and receivables collection are critical for reducing the cycle duration.