The Formula to Calculate the Cash Conversion Cycle Is

question 38

Multiple Choice

The formula to calculate the Cash conversion cycle is:

• A) Cash Conversion Cycle = (Cash conversion period) + (Receivables conversion period) - (Payable deferral period)
• B) Cash Conversion Cycle = (Inventory conversion period) + (payables conversion period) - (receivables deferral period)
• C) Cash Conversion Cycle = (Receivables conversion period) + (Payable deferral period) - (Inventory conversion period)
• D) Cash Conversion Cycle = (Inventory conversion period) + (Receivables conversion period) - (Payable deferral period)

Calculate break-even points for changes in credit policy.

Understand inventory management techniques and their financial implications.

Identify the key components of a firm's credit analysis and collection policy.

Understand the concepts and applications of credit instruments in financial management.

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Definitions:

Function-Level Goal

Specific objectives set for different functional areas within a company, such as marketing, finance, or production, to contribute to overall business strategy.

Specific Departments

Specialized units or divisions within an organization, each focusing on a certain area of operation or expertise.

Product Price

The amount of money required to purchase a specific product or service, often influenced by production costs, market demand, and competition.

Lower Costs

The process or strategy of reducing expenses incurred in operations, production, or providing services to increase profitability.