cash conversion cycle (CCC) combines three factors: The inventory conversion period, the average collection period, and the payables deferral period, and its purpose is to show how long a firm must finance its working capital Other things held constant, the shorter the CCC, the more effective the firm's working capital management.

Question

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This is a true statement. A shorter cash conversion cycle means that the firm is able to quickly turn its inventory into sales, collect those sales promptly, and defer payments to suppliers, which leads to a more effective management of working capital.

Cash Conversion Cycle (CCC) Combines Three Factors: the Inventory Conversion