The ____ Is the Average Length of Time Between the Purchase

question 10

Multiple Choice

The ____ is the average length of time between the purchase of raw materials and labor and the payment of cash for them.

• A) inventory conversion period
• B) receivables collection period
• C) payables deferral period
• D) cash conversion cycle

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Definitions:

Cash Flows

The sum of all money transactions both incoming and outgoing in an establishment, affecting its ability to maintain liquid resources.

Discounted Payback Period

The time required to recoup the cost of an investment taking the time value of money into account, effectively the period it takes for an investment's cash flows to cover its initial cost.

Cash Inflows

Money coming into a business from various sources, including sales, investment income, and financing activities.

Required Rate

The minimum percentage return that an investor expects to achieve from an investment.