For the Cook County Company, the average age of accounts receivable is 60 days, the average age of accounts payable is 45 days, and the average age of inventory is 72 days. Assuming a 365-day year, what is the length of the firm's cash conversion cycle?
A) 87 days
B) 90 days
C) 65 days
D) 48 days
E) 66 days

Question

Quizplus · Accepted Answer

The cash conversion cycle is calculated as the average age of inventory plus the average age of accounts receivable minus the average age of accounts payable: 72 + 60 - 45 = 87 days.

For the Cook County Company, the Average Age of Accounts