Jerome Industries has inventory days of 48, accounts receivable days of 21, and accounts payable days of 30. What is its cash conversion cycle?
A) 39 days
B) 57 days
C) 69 days
D) 72 days

Question

Quizplus · Accepted Answer

A) Cash conversion cycle = inventory days + accounts receivable - accounts payable
Inv Days = $1420 / ($104,380 / 365 days) = 4.9655 days;
Accounts Rec Days = $10,900 / ($122,800 / 365 days) = 32.398 days;
Accounts Payable Days = $22,640 / ($104,380 / 365 days) = 79.1684 days;
Cash conversion cycle = 4.9655 days + 32.398 days - 79.168 days = -41.8 days

Jerome Industries Has Inventory Days of 48, Accounts Receivable Days