A firm may have a negative cash conversion cycle if it
A) carries very little inventory and sells its products on credit.
B) carries high inventory and sells its products on credit.
C) carries very little inventory and sells its products for cash.
D) carries high inventory and sells its products for cash.

Question

Quizplus · Accepted Answer

A negative cash conversion cycle occurs when a firm collects cash from sales before it needs to pay its suppliers. Carrying very little inventory and selling products for cash accelerates cash inflow and minimizes cash tied up in inventory, leading to a negative cycle.

A Firm May Have a Negative Cash Conversion Cycle If