The cash conversion cycle is computed as
A) Days sales outstanding + Days inventory outstanding - Days payable outstanding
B) Days sales outstanding - Days payable outstanding
C) Days sales outstanding - Days inventory outstanding
D) Days sales outstanding - Days inventory outstanding + Days payable outstanding
E) None of the above

Question

Quizplus · Accepted Answer

The cash conversion cycle is calculated as Days Sales Outstanding (DSO) + Days Inventory Outstanding (DIO) - Days Payable Outstanding (DPO). This measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

The Cash Conversion Cycle Is Computed as