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Fill in the Blank QuestionFill in the blank question.A company has days' sales in accounts receivable of 40 days; days' sales in inventory of 55 days, and days' payable outstanding of 30 days. The cash conversion cycle is _.

Question

Fill in the Blank QuestionFill in the blank question.A company has days' sales in accounts receivable of 40 days; days' sales in inventory of 55 days, and days' payable outstanding of 30 days. The cash conversion cycle is _.

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Solution

The cash conversion cycle is calculated as follows:

Cash Conversion Cycle = Days' Sales in Inventory + Days' Sales in Accounts Receivable - Days' Payable Outstanding

Substituting the given values:

Cash Conversion Cycle = 55 days (Days' Sales in Inventory) + 40 days (Days' Sales in Accounts Receivable) - 30 days (Days' Payable Outstanding)

So, the cash conversion cycle is 65 days.

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