A Firm Has a Cash Conversion Cycle of 80 Days

question 8

Multiple Choice

A firm has a cash conversion cycle of 80 days, an average collection period of 25 days, and an average age of inventory of 70 days. Its operating cycle is _ days.

• A) 60
• B) 105
• C) 130
• D) 95

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Definitions:

Cost Of Debt

The current interest rate a business is charged on its outstanding debts, encompassing both loans and bonds.

Dividend Growth Model

A method for valuing a stock by assuming dividends grow at a constant rate in perpetuity.

Cost Of Equity

The return that investors expect for providing capital to a company, often seen as the risk-free rate plus a premium for the equity risk.

Growth Rate

The percentage change in the value of a specific metric (e.g., revenue, population) over a designated period.