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      Question

      If company’s cash conversion cycle decreases, what

      likely happened?
      A Receivables days increased significantly Correct Answer Incorrect Answer
      B Inventory days increased significantly Correct Answer Incorrect Answer
      C Payables days increased or receivables/inventory days decreased Correct Answer Incorrect Answer
      D Fixed assets increased Correct Answer Incorrect Answer
      E Equity decreased Correct Answer Incorrect Answer

      Solution

      CCC = Inventory days + Receivables days − Payables days. Decrease means better working capital management.

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