Operating cash cycle is an alternative name for the cash conversion cycle (CCC), and that entry gives the full formula, worked examples and benchmarks. This page explains the term and how it relates to similar phrases.
The cycle measures how many days a company's cash is tied up in its operations: the time from paying suppliers for goods or materials to receiving cash from customers who buy the finished product. It is usually calculated as days inventory outstanding plus days sales outstanding minus days payable outstanding. A company that holds stock for 50 days, collects from customers in 40 days and pays suppliers in 30 days has a cycle of 50 + 40 − 30 = 60 days. A shorter cycle means less cash is needed to fund working capital.
The naming can be confusing. In many textbooks the "operating cycle" is only the first two parts, inventory days plus receivable days, while the "cash cycle" or "cash conversion cycle" subtracts payable days. "Operating cash cycle" is used by some companies and treasurers to mean the latter, stressing that the measure is about cash rather than accounting profit. When comparing figures, it is worth checking which definition a report uses.