A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm's cash conversion cycle is days.

Question

Quizplus · Accepted Answer

The cash conversion cycle is calculated as the average age of inventory (60 days) plus the average collection period (45 days) minus the average payment period (30 days). Therefore, the cash conversion cycle is 60 + 45 - 30 = 75 days.

A Firm Has an Average Age of Inventory of 60