A juice manufacturer wants to determine the time required to convert a dollar spent on materials into a dollar received in sales. Which of the following metrics would be most appropriate to make this determination?

Question

Quizplus · Accepted Answer

The metric that measures the time required to convert a dollar spent on materials into a dollar received in sales is called cash-to-cash cycle time. It measures the number of days it takes for a company to convert its investments in inventory and other resources back into cash. Activity-based costing measures the cost of activities, products, and services, while inventory carrying cost measures the cost of holding inventory. Average financial turnover measures how efficiently a company uses its assets to generate revenue. None of these metrics directly measure the time it takes to convert a dollar spent on materials into a dollar received in sales.

A Juice Manufacturer Wants to Determine the Time Required to Convert