A negative cash conversion cycle ________.
A) means that the operating cycle exceeds the average inventory period
B) means that the average payment period exceeds the operating cycle
C) indicates that a firm is shortening its average payment period and lengthening its average collection period
D) indicates that a firm is shortening its average age of inventory and average payment period

Question

Quizplus · Accepted Answer

A negative cash conversion cycle means that the average payment period exceeds the operating cycle, allowing a company to finance its inventory through its suppliers.

A Negative Cash Conversion Cycle ________