Final answer:
The firm has inventory after the first step in the Operating Cycle. This is because the initial stage involves acquiring inventory to sell to customers, which then leads to accounts receivable and eventually cash as the cycle progresses.
Step-by-step explanation:
After the first step in the Operating Cycle of a firm, the company has inventory. The Operating Cycle begins when a company purchases inventory, either with cash or on account.
As such, the first asset that the firm acquires during the cycle is inventory which it intends to sell to customers.
The cycle continues as the inventory is sold and then the firm generates accounts receivable from its customers, which would be the second step in the cycle if sales are made on credit. Eventually, the accounts receivable turn into cash as customers pay their debts, completing the cycle.