A firm's inventory and accounts payable periods are 80 and 42 days,respectively.How long can the firm's receivables period be in order to have no longer than a 65-day cash conversion cycle?

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Quizplus · Accepted Answer

The cash conversion cycle is calculated as inventory period + receivables period - accounts payable period. To have a 65-day cash conversion cycle: 80 + receivables period - 42 = 65. Solving for the receivables period gives 27 days.

A Firm's Inventory and Accounts Payable Periods Are 80 and 42