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Finance > Chap 8: Working Capital Management > Flashcards

Chap 8: Working Capital Management Flashcards

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1
Q

What is cash conversion cycle?

A
  • the length of time between the payment of creditors (account payable) and the receipt of cash from debtors (account receivable)
  • the shorter ccc is better since it indicates that a company is efficient in converting its assets into cash
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2
Q

What is the formula for inventory turnover days?

A

Ending inventory/cogs x 365 days

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3
Q

What is the formula for days sales outstanding?

A

Receivables/annual sales x 365 days

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4
Q

What is the formula for days payable outstanding?

A

Trade payable/COGS x 365 days

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5
Q

What is the formula for CCC?

A

ITD+DSO-DPO

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Finance (6 decks)

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