Cash Cycle Conversion

Question 1

What is the Cash Conversion Cycle?

Answer 1

a view of efficiency ratios in terms of days

Question 2

Average Payment Period

Answer 2

average accounts payable / average daily purchases

Question 3

What is the Average Payment Period general rule?

Answer 3

the higher the better

Question 4

What is Average Payment Period?

Answer 4

how many DAYS in average it takes a company to PAY its Accounts Payable

Question 5

Average Collection Period

Answer 5

average accounts receivable / average daily sales

Question 6

What is the general rule for Average Collection Period?

Answer 6

the lower the better

Question 7

What is Average Collection Period?

Answer 7

how many DAYS on average it takes a company to COLLECT its accounts receivable

Question 8

Average Inventory Days Outstanding

Answer 8

average inventory / average daily COGS

Question 9

What is the general rule for Average Collection Period?

Answer 9

the lower the better

Question 10

What is Average Collection Period?

Answer 10

how long inventories are held before being sold

Question 11

What is the Average daily COGS formula?

Answer 11

COGS of that year / 365