The cash conversion cycle (CCC)is defined as:
A)Inventory Days + Accounts Receivable Days - Accounts Payable Days.
B)Inventory Days - Accounts Receivable Days - Accounts Payable Days.
C)Inventory Days + Accounts Receivable Days + Accounts Payable Days.
D)Inventory Days + Accounts Payable Days - Accounts Receivable Days.
E)Inventory Days - Accounts Receivable Days + Accounts Payable Days.

Question

Quizplus · Accepted Answer

The cash conversion cycle (CCC) is calculated by subtracting the accounts payable days from the sum of inventory days and accounts receivable days. This is because the CCC measures the time it takes for a company to convert its inventory and receivables into cash, while also analyzing the time it takes for the company to pay its bills to suppliers. Therefore, the correct formula for calculating the CCC is (Inventory Days + Accounts Receivable Days) - Accounts Payable Days.

The Cash Conversion Cycle (CCC)is Defined As