Question

Helena Furnishings wants to sharply reduce its cash conversion cycle. Which of the following steps would reduce its cash conversion cycle? a. The company increases its average inventory without increasing its sales b. The company reduces its DSO. c. The company starts paying its bills sooner d. Statements a and b are correct e. All of the statements above are correct.

Answer 1

Answer:

The correct answer is B

Explanation:

CCC stands for or termed as Cash Conversion Cycle, which is defined as the metric, expresses or states the time length (in days) which the company take to convert the investments in inventory and the other resources into the cash flows from sales.

So, if the company decrease the DSO, then its collecting the accounts receivable would be more efficient, therefore, decrease the cycle of cash conversion.