The cash conversion cycle is the length of time between the cash outflow for materials and the cash inflow from sales.

Question

Quizplus · Accepted Answer

The statement is true. The cash conversion cycle is also known as the operating cycle and encompasses the period of time it takes a company to purchase materials, convert them into finished goods, sell those goods, and receive payment. It is calculated by adding the days inventory outstanding (DIO), days sales outstanding (DSO), and days payables outstanding (DPO) together.

The Cash Conversion Cycle Is the Length of Time Between