Suppose your company receives trade credit from your suppliers which allows you 10 days to pay for the goods you buy.You flow your inventory through your company every 30 days.You allow your customers 30 days to pay you.Your cash-to-cash cycle time is:

Question

Quizplus · Accepted Answer

The cash-to-cash cycle time can be calculated as follows:
Inventory Conversion Period + Receivables Conversion Period – Payables Deferral Period
Inventory Conversion Period = 30 days
Receivables Conversion Period = 30 days
Payables Deferral Period = 10 days (as per the given information)
Therefore, cash-to-cash cycle time = 30 + 30 - 10 = 50 days.

Suppose Your Company Receives Trade Credit from Your Suppliers Which