The measure of the average time between when a company pays cash for its inventory purchases and when it receives cash for its sales is best described as the:
A) liquidity.
B) cash burn.
C) operating cycle.
D) cash conversion cycle.
E) days sales outstanding.

Question

Quizplus · Accepted Answer

The cash conversion cycle measures the average time between outlaying cash for inventory and receiving cash from sales, reflecting the efficiency of a company's cash flow management.

The Measure of the Average Time Between When a Company