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:

Mark-up

The extra sum included in the goods' selling price to cover both overhead expenses and profit.

Selling Price

The amount of money for which a product or service is sold to a customer.

Cost

The amount of money required to purchase something or the expenditure incurred on the production of a good or service.

New Balance

The amount remaining in an account after all debits and credits have been accounted for during a specified period.