What is the cash conversion or net trade cycle?
A) The amount of time needed to complete the normal operating cycle of a firm.
B) The amount of time it takes to manufacture or buy inventory.
C) The amount of time it takes to sell inventory.
D) The amount of time it takes to be profitable.

Question

Quizplus · Accepted Answer

The cash conversion cycle or net trade cycle is the amount of time it takes for a company to convert its investments in inventory and accounts receivable into cash. It includes the time it takes to complete the normal operating cycle (buying inventory, selling it, and collecting payment from customers) and the time it takes to pay suppliers. A shorter cash conversion cycle or net trade cycle is generally better for a company, as it means the company is able to generate cash quickly and efficiently.

What Is the Cash Conversion or Net Trade Cycle