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Which of the following companies is most likely to have a negative Cash Conversion Cycle?
a) A discount retailer

b) A farmer who grows corn and sells to a distributor

c) A manufacturer who makes high-quality steam evaporators for nuclear power plants

d) A car dealership that provides their own in-house financing

Respuesta :

Answer:

a) A discount retailer

Explanation:

The formula to determine the cash conversion cycle is shown below:

Cash Conversion Cycle = days inventory outstanding + days sales outstanding - days payables outstanding.

So as per the given situation, the first option i.e. discount retailer should have the negative cash conversion cycle as in other options it created the positive impact

So the option a is correct

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