A Firm Has a Cash Conversion Cycle of 120 Days

question 336

Multiple Choice

A firm has a cash conversion cycle of 120 days, an average collection period of 25 days, and an average payment period of 50 days. The firm's average age of inventory is ________ days.

• A) 45
• B) 95
• C) 125
• D) 145

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Definitions:

Indirect Material

Materials used in the production process that are not directly identifiable with specific products or jobs, such as lubricants and cleaning supplies.

Direct

involves straight or firsthand transmission or provision of goods, services, or communication without the involvement of an intermediary.

Materials Traceable

Direct materials that can be directly identified and assigned to the manufacturing process of a specific product.

Specific Products

Goods that are distinctly defined or particularized among a broader range of products.