Casey Company Has an Accounts Receivable Turnover of 36 Days

question 37

Multiple Choice

Casey Company has an accounts receivable turnover of 36 days, an inventory turnover of 77 days, and an accounts payable turnover of 40 days. Casey's cash conversion cycle is:

• A) 153 days.
• B) 81 days.
• C) 73 days.
• D) 1 day.
• E) 135 days.

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Definitions:

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate revenue, calculated by dividing total revenue by average assets.

Total Assets

The sum of all current and non-current assets owned by an entity, reflecting its overall value and financial strength.

Net Profit/Pretax Profit

The income a company has left after paying all expenses but before taxes; an indicator of overall profitability.

Leverage Ratio

A financial ratio indicating the level of debt used by a business to finance its assets, often used to assess financial risk.