Question

The cash conversion cycle begins when a firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales. begins when a firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures. estimates how long it takes on average for a firm to collect its outstanding accounts receivable balance. shows how long a firm keeps its inventory before selling it.

Answer 1

B. Begins when a firm invests cash to purchase the raw materials that would be used to produce the goods that the firm manufactures.

Step-by-step explanation:

A Cash Conversion Cycle (CCC) is an index which is used to measure the time it takes a business to purchase supplies, turn them into a product or service, sell them, and collect accounts receivable (if needed).

The second statement is correct

This is because the cycle begins once an inventory is purchased.

The first statement is wrong

This is because the cash conversion cycle does not end when the firm collects payments on its credit sales.

The third statement is wrong.

This is because the CCC is not used to estimate how long it takes for a firm to collect its outstanding accounts receivable, but how long it takes for the firm to convert its inventory to cash.

The fourth statement is wrong.

This is because the sole purpose of the CCC is not to show how long an inventory stays before sale, rather, it is a combination of both inventory time, Days Sales Outstanding and Days Payable Outstanding.