A company’s cash conver cycle is most likely to decrease if that company experiences 1. increase in payables turnover ratio 2. decrease in inventory turnover ratio 3. increase in receivables turnover ratio 4. decrease in payables payment period The correct ans is 3. increase in rec turnover ratio.? But isnt 1 and 4 also correct as they also will decrease CCC. If we write the CCC eq, then 1 and 4 should also decrease CCC? Thanks
CCC = avg days of rec. + avg days of inv. - avg. days of payables 1. Increase in Payable Turnover Ratio = Decrease in AVG. DAYS PAYABLES = INCREASE IN CCC 4. Decrease in Payables Payment Period = Decrease in days payables = Increase in CCC. That’s how I understood it. And 3 is the right answer because Increase in Receivables Turnover Ratio = Decrease in AVG DAYS OF RECEIVABLES = DECREASE IN CCC.
CCC? A credit rating now highly desirable among most American banks and autombile companies?
Cash Conversion Cycle … unless you were being sarcastic … im too brain dead to tell.
I actually thought it was kind of a funny joke…