Question

2016 Spring Q.No.5 What is the length of cash conversion cycle if an inventory conversion period of 80 days, a receivable conversion period of 38 days, and a payables deferral period of 30 days. [2] Solution:​

Answer 1

Answer:

What Is the Cash Conversion Cycle (CCC)?

The cash conversion cycle (CCC) is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Also called the Net Operating Cycle or simply Cash Cycle, CCC attempts to measure how long each net input dollar is tied up in the production and sales process before it gets converted into cash received.

This metric takes into account how much time the company needs to sell its inventory, how much time it takes to collect receivables, and how much time it has to pay its bills.

Answer 2

Explanation:

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