When interpreting the cash conversion cycle (CCC), which of the following is true?

Question

Quizplus · Accepted Answer

The lower the CCC value the better, because it means the firm is recovering its cash quickly. The CCC measures the time it takes for a company to convert its resources into cash flow. A lower CCC value indicates that the company is efficiently managing its inventory, accounts receivable, and accounts payable, and can generate cash quickly from its operations. In contrast, a higher CCC value indicates that the company takes longer to convert its resources into cash, which can lead to cash flow problems and a higher cost of capital. Therefore, option B is the correct choice.

When Interpreting the Cash Conversion Cycle (CCC), Which of the Following