The cash conversion cycle consists of three parts. List and define these three parts. How do they fit together to form the cash conversion cycle? You may answer this last question with a formula if you wish
What will be an ideal response?
Answer: The three parts of the cash conversion cycle are the production cycle, the collection cycle, and the payment cycle. The production cycle is the period of time from when the firm first starts to make the product until the customer buys it. The collection cycle runs from the sale of the product until payment is received, and the payment cycle begins when the firm purchases necessary raw materials and ends when payment is made. The cash conversion cycle consists of the production cycle plus the collection cycle minus the payment cycle.
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