A Company Has 30 Days in Payables, 10 Days in Inventory

question 30

Multiple Choice

A company has 30 days in payables, 10 days in inventory and 20 days for the average collection period. How many days are in the company's cash conversion process?

• A) 0
• B) 20
• C) 40
• D) 60

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Definitions:

Current Liabilities

Obligations or debts that a company is expected to pay off within one year or within its operating cycle, whichever is longer.

Current Assets

These are short-term assets likely to be converted into cash, utilized, or sold within the business cycle or a year.

Utilities Expense

The cost incurred by businesses or households for the consumption of utilities like electricity, water, and gas.

Journal Entries

A record of financial transactions in accounting, documenting the debit and credit effects on specific accounts.