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What Is the Length of the Cash Conversion Cycle for a Firm

question 68

Essay

What is the length of the cash conversion cycle for a firm with $55,000 in average inventory, $60,000 in average receivables, $30,000 in average payables, annual sales of $700,000, and a cost of goods sold of 75%?


Definitions:

Ideal

A concept or standard of perfection or excellence that serves as a benchmark or goal.

Price Takers

Entities in a market that accept prevailing prices for goods or services, lacking the market power to influence prices on their own.

Market

An abstract concept encompassing the forces of demand and supply and the interaction of buyers and sellers with the potential for exchange to occur.

Business

The organized activities and operations of individuals or entities to produce and sell goods and services for profit.

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