A firm has an average age of inventory of 101 days, an average collection period of 49 days, and anaverage payment period of 60 days. The firm's cash conversion cycle is
A) 112 days.
B) 8 days
C) 90 days.
D) 150 days.

Question

Quizplus · Accepted Answer

The cash conversion cycle is calculated as follows:

Cash conversion cycle = Average inventory days + Average collection period - Average payment period

= 101 + 49 - 60

= 90 days

Therefore, the correct answer is C) 90 days.

A Firm Has an Average Age of Inventory of 101