An increase in the cash conversion cycle would lead to an increase in the firm's short-term needs and financing costs.

Question

Quizplus · Accepted Answer

The cash conversion cycle measures the time it takes for a company to convert its inventory into cash. An increase in this cycle indicates that the company is taking longer to generate cash from its sales. This increase in the firm's short-term needs and financing costs as it may need to borrow money to cover its operations during this prolonged cycle.

An Increase in the Cash Conversion Cycle Would Lead to an Increase