Operating cycle is the duration of time between acquisition of supplies and the collection of cash from receivables. In a trading concern, operating cycle begins with procuring goods to be sold in the market and ends with realising cash from creditors after the sale of these goods. In a manufacturing concern, there are some more activities to be performed, like procurement of raw materials, putting the raw materials into work in progress and converting these ultimately into finished goods, sale of finished goods on credit or cash and realising cash from creditors. In both the cases, there is a time gap between the first stage of procuring goods or raw materials and the last stage of realising cash. This time duration is called operating cycle and working capital is required to finance operations during operating cycle for the business to run smoothly. Working capital requirement is higher in firms with longer operating cycle and lower in firms with shorter processing cycle.