The ________ is the length of time from the point when raw materials are purchased on account to the point when payment is made to the supplier of the goods.
A) cash conversion cycle
B) average payment period
C) average age of inventory
D) average collection period

Question

Quizplus · Accepted Answer

The average payment period measures the time it takes for a company to pay its suppliers for the raw materials purchased on account. It is calculated by dividing the total accounts payable by the average daily cost of goods sold. The cash conversion cycle, on the other hand, measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash. The average age of inventory measures the average number of days it takes for a company to sell its inventory, while the average collection period measures the average number of days it takes for a company to collect payment from its customers.

The ________ Is the Length of Time from the Point