Question

Brothers Breads has the following data. What is the firm's cash conversion cycle? Inventory conversion period = 50 days Average collection period = 17 days Payables deferral period = 25 daysa. 31 daysb. 34 daysc. 38 daysd. 42 dayse. 46 days

Answer 1

Option (D) is correct.

Step-by-step explanation:

Given that,

Inventory conversion period = 50 days

Average collection period = 17 days

Payables deferral period = 25 days

Cash Conversion cycle:

= Inventory Conversion Period + Average collection Period - Payables deferral Period

= 50 days + 17 days - 25 days

= 42 days

Therefore, the firm's cash conversion cycle is 42 days.