 In this discussion we will be discussing the discussion question of describe the operating cycle for a merchandising company. When thinking about the operating cycle for a merchandising company, we're really contrasting that with the operating cycle from a service company, meaning we're focusing on that cycle of inventory, the purchasing and the selling of inventory. So we can think about that process as if we're going to have a business where we make money by purchasing something, then marking it up and then selling up, selling it, that will in essence be the cycle that we are talking about here. So the first component in the cycle is we're going to take any money that we have, we're going to purchase merchandise, merchandise that we intend to resell. We're going to hold on to that inventory or that merchandise until the point in time we can sell it. We're going to mark it up, of course, so that we sell it at a profit and then we're going to make the sale. Now typically when we think about this cycle, we think about it as making the sale on account. Although we could make it for cash, if we made it for cash then we would just take that cash and buy more inventory that would be the cycle. But typically when when you're asked a question like this we think of the longer type of cycle where we would make the sale on account, we would give the inventory and we would have an IOU and accounts receivable. We would then get payment on the receivable at some point in time and once we have the money, once again, we'll use that money to buy more inventory that we will then plan to sell. That's going to be the cycle we want to think about when considering a merchandising company.