Question

A company with a 120-day operating cycle determines its cash conversion cycle using the following data: Receivable days: 35 Inventory days: 95 Payable days: 45 What is the company's cash conversion cycle

Answer 1

Answer: 85 days

Explanation:

The Cash Conversion Cycle is used to estimate the amount of time it takes a firm to convert its inventory into cash.

Formula is;

= Receivable days + Inventory days - Payable days

= 35 + 95 - 45

= 85 days