How would you interpret an interval measure of 50 days?
A)It takes 50 days on average to collect receivables
B)Inventory is converted into sales every 50 days
C)The firm can pay its expenses for at least 50 days
D)Assets are converted into sales every 50 days

Question

Quizplus · Accepted Answer

An interval measure of 50 days typically refers to the length of time a company can survive without additional cash inflows. This is known as the company's operating cycle or cash conversion cycle. In this case, the interval measure indicates that the firm can pay its expenses for at least 50 days without needing to generate additional cash inflows. Option A refers to a measure of accounts receivable turnover, Option B refers to inventory turnover, and Option D refers to asset turnover, none of which are directly related to an interval measure of 50 days.

How Would You Interpret an Interval Measure of 50 Days