Inmoo Company's average age of accounts receivable is 86 days,the average age of accounts payable is 40 days,and the average age of inventory is 69 days.Assuming a 365-day year,what is the length of its cash conversion cycle?
A) 116 days
B) 107 days
C) 115 days
D) 139 days
E) 124 days

Question

Quizplus · Accepted Answer

The cash conversion cycle (CCC) is calculated by adding the average age of inventory to the average age of accounts receivable and subtracting the average age of accounts payable.

CCC = average age of inventory + average age of accounts receivable - average age of accounts payable
CCC = 69 + 86 - 40
CCC = 115

Therefore, the length of Inmoo Company's cash conversion cycle is 115 days.

Inmoo Company's Average Age of Accounts Receivable Is 86 Days,the