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      Question

      What does ‘working capital cycle’ (cash conversion

      cycle) measure?
      A Time to convert purchases into sales only Correct Answer Incorrect Answer
      B Time between cash outflow for purchase and cash inflow from sale Correct Answer Incorrect Answer
      C Operating profit divided by inventory Correct Answer Incorrect Answer
      D Ratio of current assets to current liabilities Correct Answer Incorrect Answer
      E Time to convert fixed assets to cash Correct Answer Incorrect Answer

      Solution

      CCC = Days inventory + Days receivables − Days payables; measures time between cash outflow and inflow.

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