BP Has a Cash Conversion Cycle of 80 Days,an Average

question 106

Multiple Choice

BP has a cash conversion cycle of 80 days,an average collection period of 25 days,and an average age of inventory of 70 days.Based on this information,BPs operating cycle is ________ days.

• A)85
• B)75
• C)65
• D)55
• E)none of the above

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Definitions:

Account

A report or record that maintains the details of each financial transaction a company engages in.

Accounts Receivable

Money owed to a business by its customers from the sale of goods or services on credit.

Credit

A financial arrangement where a borrower receives something of value with the agreement to repay it later, often including interest.

Normal Balance

The side of an account that is usually positive or increased; for assets and expenses, it's the debit side, for liabilities, equity, and revenue, the credit side.