CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Which of the following correctly defines the operating cycle?

I. Cash conversion cycle - Accounts payable period
II. Inventory period + Accounts receivable period
III. Cash conversion cycle + Accounts payable period
IV. Inventory period - Accounts receivable period - Accounts payable period
A. I and II
B. II and III
C. II, III, and IV
Explanation: Cash conversion cycle = Accounts receivable period + Inventory period - Accounts payable period

User Contributed Comments 5

User Comment
maria15 The question and answer doesn't make sense. Shouldn't it be A?
maria15 Never mind..I got it. lol
CFA1Dec11 Cash conversion cycle = Accounts receivable period + Inventory period - Accounts payable period

And Operating Cycle = Accounts receivable period + Inventory period
Rivermax The option II is in all selections therefore use this formula to help and rearrange for the others...
Sp1993 Operating cycle = (Cash Conversion Cycle) PLUS payables period no?

Seems legit lol...
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