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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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