A negative cash conversion cycle indicates that the
A)operating cycle exceeds the average payment period.
B)average payment period is less than the operating cycle.
C)firm is shortening its average payment period and lengthening its average collection period.
D)lengthening its average collection period and lengthening its inventory period.
E)none of above are correct

Question

Quizplus · Accepted Answer

A negative cash conversion cycle indicates that the firm is able to convert its inventory into cash before it needs to pay its suppliers, meaning the average payment period is longer than the operating cycle. None of the given options correctly describe this scenario.

A Negative Cash Conversion Cycle Indicates That the