CFA Practice Question

CFA Practice Question

You have the following information for a firm:

COGS $155.8 million
Average Inventory $14.8 million
Payables payment period 14 days
Days Sales Outstanding 10 days

What is the firm's cash conversion cycle?
A. 20.7
B. 30.7
C. 44.7
Explanation: Cash Conversion Cycle = (365/Inventory Turnover) + Days Sales Outstanding - Payables Payment Period, where Inventory Turnover = COGS/Average Inventory

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