The time between when the firm pays its suppliers and when it collects money from its customers is known as the:
A)operating cycle
B)cash conversion cycle
C)accounts receivable period
D)none of the above

Question

Quizplus · Accepted Answer

The time between when the firm pays its suppliers and when it collects money from its customers is known as the cash conversion cycle. This cycle measures the amount of time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. The operating cycle is the time it takes for a company to turn its inventory into cash, which includes the time it takes to purchase or manufacture inventory and sell it. The accounts receivable period is the amount of time it takes for a company to collect payment from its customers after a sale has been made.

The Time Between When the Firm Pays Its Suppliers and When