The cash conversion cycle (CCC)combines three factors: The inventory conversion period, the average collection period, and the payables deferral period, and its purpose is to show how long a firm must finance its working capital.Other things held constant, the shorter the CCC, the more effective the firm's working capital management.

Question

Quizplus · Accepted Answer

This statement accurately describes the purpose and impact of the cash conversion cycle (CCC). A shorter CCC indicates that a firm is able to more efficiently manage its working capital and convert inventory into cash, collect payments from customers, and defer payments to suppliers.

The Cash Conversion Cycle (CCC)combines Three Factors: the Inventory Conversion