Question

The Cash Conversion Cycle is the length of time between a firm’s purchase of inventory and the receipt of cash from accounts receivable.
(True/False)

Answer 1

Answer:

true

Explanation:

Answer 2

Answer:  

True. The 'cash conversion cycle' is the length of time between a 'firm’s 'purchase of inventory' and the 'receipt of cash' from accounts receivable'.  

Explanation:  

The CCC is a specific measurement of time between the investment done on inventory for a business process and the actual cash received from the sales of the finished products. There are three main parts of CCC – the outstanding of days inventory, the outstanding of the day's sales and lastly the outstanding of the days payable. Companies should aim at attaining shorter CCCs rather than the longer ones.