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# Cash Conversion Cycle, Currency, Demand Deposits

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1. Define cash conversion cycle (CCC), and explain why, holding other things constant, a firm's profitability would increase if it lowered its CCC.

2. How does currency, demand deposits and marketable securities relate in today's society? Provide an example.

#### Solution Preview

Dear Student,

1. Define cash conversion cycle (CCC), and explain why, holding other things constant, a firm's profitability would increase if it lowered its CCC.
Cash conversion cycle=inventory conversion cycle + receivables conversion period- payables conversion period
Inventory conversion period= (average inventory/cost of goods sold)*365
Receivables conversion period= (average accounts receivable/credit sales)*365
Payables conversion period= (average accounts payable/purchases)*365

Cash conversion cycle is the length of time money is tied up ...

#### Solution Summary

The expert defines cash conversion cycle, and explains why holding other things constant, a firms profitability would increase if its lowered its cash conversion cycle. How currency, demand deposits and marketable securities relate in today;s society.

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