The Bobblehead Company has an Accounts Receivable turnover of 33 days, an inventory turnover of 77 days and an Accounts Payable turnover of 39 days. Bobblehead's cash conversion cycle is:

Question

Quizplus · Accepted Answer

The cash conversion cycle formula is:
CCC = Days Inventory Outstanding + Days Sales Outstanding - Days Payable Outstanding

Days Inventory Outstanding = 77 days
Accounts Receivable Turnover = 33 days, so Days Sales Outstanding = 33 days
Accounts Payable Turnover = 39 days, so Days Payable Outstanding = 39 days

Plugging in the numbers:
CCC = 77 days + 33 days - 39 days
CCC = 71 days

Therefore, the best choice is C) 71 days.

The Bobblehead Company Has an Accounts Receivable Turnover of 33