Homework answers / question archive / Calculation of Cash Conversion Cycle: Cash Conversion Cycle (CCC) = Average collection period + Days sales outstanding - Payables deferral period Here, Average collection period = Accounts receivables / Average daily sales = $2,000,000 / $120,000 = 16

Calculation of Cash Conversion Cycle: Cash Conversion Cycle (CCC) = Average collection period + Days sales outstanding - Payables deferral period Here, Average collection period = Accounts receivables / Average daily sales = $2,000,000 / $120,000 = 16

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Calculation of Cash Conversion Cycle:

Cash Conversion Cycle (CCC) = Average collection period + Days sales outstanding - Payables deferral period

Here,

Average collection period = Accounts receivables / Average daily sales

= $2,000,000 / $120,000

= 16.67 Days

Days sales outstanding = Inventory / Average daily sales

= $5,000,000 / $120,000

= 41.67 Days

Payables deferral period = 30.00 Days

Cash Conversion Cycle (CCC) = 16.67 Days + 41.67 Days - 30.00 Days = 28.34 Days or 28 days