The longer the cash conversion period,the greater the potential for cash flow problems to exist for a company.

Question

Quizplus · Accepted Answer

The cash conversion period measures the length of time it takes for a company to convert its investments in inventory and other resources to cash. The longer this period is, the longer the company is tying up its cash in these investments, which increases the potential for cash flow problems to arise. Therefore, statement A is true.

The Longer the Cash Conversion Period,the Greater the Potential for Cash