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In financial management, the time interval required to convert raw materials into finished goods, sell them, and collect cash from customers is the:

APayback Period
BOperating Cycle
CCash Conversion Cycle
DAccounting Cycle

Explanation

• The Cash Conversion Cycle (CCC) measures the duration between spending cash for inventory inputs and collecting cash receivables from sales.
• Formula: $CCC = text{Inventory Days} + text{Receivables Days} – text{Payables Days}$.
• A shorter Cash Conversion Cycle indicates efficient working capital management.

Exam Relevance
  • Topic: Financial Management
  • Subtopic: Cash Conversion Cycle
Submitted by: mcqstutor Team More Management MCQs →

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