# BEC REVIEW B

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1. What is the Cash Conversion Cycle
1. Pays Suppliers

2. Finishes Goods and sells them

3. Collects Receivables
2. What is the Inventory Conversion Period?
The average time required to convert materials into finished goods and sell those goods.
3. What is the following:

The average time required to convert materials into finished goods and sell those goods.
The Inventory Conversion Period
4. What is the calculation for the Inventory conversion period?
Inventory conversion period = Average inventory / Cost of goods sold per day
5. What is the Receivables collection period?
The average time required to collect accounts receivable.
6. What is the following:

The average time required to collect accounts receivable.
The Receivables collection period.
7. What is the calculation for the Receivables collection period?
Receivables collection period = Average receivables / Credit sales per day
8. What is the Payables deferral period?
The average length of time between the purchase of materials and labor and the payment of cash for them.
9. What is the following:

The average length of time between the purchase of materials and labor and the payment of cash for them.
The Payables deferral period
10. What is the calculation for the payables deferral period?
Payables deferral period = Average payables / purchases per day
11. To calculate the cash conversion cycle, what is the formula?
Cash conversion cycle = inventory conversion period + Receivables conversion period - payables deferral period.
12. Effective working capital management involves shorting theĀ ---------------------- as much as possible without harming operations.
Effective working capital management involves shorting the cash conversion cycle as much as possible without harming operations.
 Author: Joens1313 ID: 311451 Card Set: BEC REVIEW B Updated: 2015-11-14 16:03:59 Tags: BEC REVIEW Folders: Description: BEC REVIEW B Show Answers: