Which one of the following measures indicates how long a ﬁrm can continue operating without any additional cash inﬂows?
A) Current ratio
B) Cash ratio
C) Quick ratio
D) Interval measure
E) Total debt ratio

Question

Quizplus · Accepted Answer

The Interval measure is also known as the "cash conversion cycle" or "operating cycle". It measures how long a firm can continue operating without any additional cash inflows. It calculates the number of days between a company's payment of suppliers and the receipt of cash from customers. This measure takes into account the time it takes for a company to convert its inventory into cash and it shows how effectively a company manages its working capital.

Which One of the Following Measures Indicates How Long a ﬁRm