The Cash Cycle shows the relationship between three key metrics: days in payables, assets turnover, and days sales are outstanding

Question

Quizplus · Accepted Answer

The Cash Cycle, or Cash Conversion Cycle, shows the relationship between the days inventory is held before being sold (days inventory outstanding), the days sales are outstanding (how long it takes to collect revenue from sales), and the days payables are outstanding (how long the company takes to pay its own bills). Asset turnover is not a component of the Cash Cycle.

The Cash Cycle Shows the Relationship Between Three Key Metrics