Ideally a firm would like to have a
A) positive cash conversion cycle.
B) negative operating cycle.
C) positive operating cycle.
D) negative cash conversion cycle.

Question

Quizplus · Accepted Answer

A negative cash conversion cycle means that a firm is able to convert its inventory into cash before it has to pay its suppliers. This indicates that the firm is efficient in managing its working capital and has a better cash flow position. A positive cash conversion cycle would imply that a firm is paying its suppliers before receiving cash from its customers, which can lead to cash flow issues. Therefore, having a negative cash conversion cycle is the ideal situation for a firm.

Ideally a Firm Would Like to Have a