Question

A firm’s average age of inventory is 80 days, the average collection period is 50 days....

A firm’s average age of inventory is 80 days, the average collection period is 50 days.

a.       With average payment period of 70 days, compute Cash Conversion Cycle (CCC).

b.       Explain whether the CCC should be lengthened or shortened.

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Answer #1

Calculation for cash conversion cycle is shown below

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