The average cash-to-cash cycle is defined as:

Question

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The average cash-to-cash cycle is calculated by adding the number of days it takes for a company to sell its inventory (days in inventory) to the number of days it takes for the company to collect payment on its sales (days in account receivable), and then subtracting the number of days it takes for the company to pay its suppliers (days in accounts payable). This represents the total number of days that cash is tied up in the company's working capital cycle. Therefore, the correct formula for calculating the cash-to-cash cycle is: days in inventory + days in accounts receivable - days in accounts payable.

The Average Cash-To-Cash Cycle Is Defined As