Which of the following are included in the cash conversion cycle?
A)inventory conversion period, the receivables collection period, and the payables deferral period
B)inventory conversion period, the receivables collection period, and the long-term assets cycle
C)acid test period, the receivables collection period, and the payables deferral period
D)the inventory conversion period and the payables deferral period

Question

Quizplus · Accepted Answer

The cash conversion cycle includes the time it takes to convert inventory into sales (inventory conversion period), the time it takes to collect payments from customers (receivables collection period), and the time it takes to pay suppliers for inventory (payables deferral period). Option B is incorrect because the long-term assets cycle is not part of the cash conversion cycle. Option C is incorrect because the acid test period is not a commonly used term in reference to the cash conversion cycle. Option D is incorrect because it only includes two out of the three components of the cash conversion cycle.

Which of the Following Are Included in the Cash Conversion