- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 11. Financial Analysis Techniques
- Subject 3. Liquidity Ratios
CFA Practice Question
An analyst has gathered the following data about a company: average receivables collection period of 37 days, average payables payment period of 30 days, average inventory processing period of 46 days. What is their cash conversion cycle?
Correct Answer: 53 days
Cash conversion cycle = average receivables collection period + average inventory processing period - payables payment period = 37 + 46 - 30 = 53 days
User Contributed Comments 7
| User | Comment |
|---|---|
| smiley25 | Operating cycle = 37 + 46 = 83 days |
| ashok1959 | can some one explain , why answer is 53 and not 83? |
| achu | CCC = operating cycle MINUS the average accts payable balance. Thus, 83-30 =53. |
| safash | difference between operating cycle & cash conversion cycle? |
| johntan1979 | Similar |
| FozzeyBear | a lot of help you provided there johntan1979. I've come to expect this from you though |
| ashish100 | johntan definitely on some meds.. dude's everywhere |