What is the cash conversion cycle for a firm with $3 million average inventories, $1.5 million average accounts payable, a receivables period of 40 days, and an annual cost of goods sold of $18 million?

Name: What is the cash conversion cycle for a firm with $3 million average inventories, $1.5 million average accounts payable, a receivables period of 40 days, and an annual cost of goods sold of $18 million?
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Question

Quizplus · Accepted Answer

Cash conversion cycle = $3m/($18m/365) + 40 - $1.5m/($18m/365) = 70.42 days

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