Question

based on the following information, which of the following is closest to the cash conversion cycle? days inventory held = 50 days days sales outstanding = 70 days days payables outstanding = 80 days 40 days 60 days 100 days 150 days

Explanation:

Step1: Recall Cash Conversion Cycle Formula

The formula for the cash conversion cycle (CCC) is \( \text{CCC} = \text{Days Inventory Held} + \text{Days Sales Outstanding} - \text{Days Payables Outstanding} \).

Step2: Substitute the Given Values

We know:

• Days Inventory Held = 50 days
• Days Sales Outstanding = 70 days
• Days Payables Outstanding = 30 days

Substitute these into the formula:
\( \text{CCC} = 50 + 70 - 30 \)

Step3: Calculate the Result

First, add 50 and 70: \( 50 + 70 = 120 \).
Then, subtract 30: \( 120 - 30 = 90 \).

Answer:

90 days (matching the option "90 days")