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.

Question

Quizplus · Accepted Answer

The cash conversion cycle is computed by adding Days' Inventory Outstanding (DIO) and Days' Sales Outstanding (DSO) and subtracting Days' Payable Outstanding (DPO). Therefore, the formula would be DIO + DSO - DPO.

How Is the Cash Conversion Cycle Computed