How Is the Cash Conversion Cycle Computed

question 19

Multiple Choice

How is the cash conversion cycle computed?

• A)days' inventory outstanding + days' sales outstanding - days' payable outstanding.
• B)days' inventory outstanding - days' sales outstanding - days' payable outstanding.
• C)days' inventory outstanding - days' sales outstanding + days' payable outstanding.
• D)days' inventory outstanding + days' sales outstanding + days' payable outstanding.

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Definitions:

Marking To Market

This refers to the daily adjustment of accounts to reflect profits and losses in the value of securities.

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Derivative Security

A financial instrument whose value is based on the value of another asset.

Economic Exposure

Long-term financial risk arising from permanent changes in prices or other economic fundamentals.