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Question 404 - CSCP discussion

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Which of the following descriptions represents cash-to-cash conversion?

A.
The conversion time from material acquisition to sales revenue
Answers
A.
The conversion time from material acquisition to sales revenue
B.
The conversion time from sales order lo receipt of payment
Answers
B.
The conversion time from sales order lo receipt of payment
C.
The currency conversion rate when buying and selling goods
Answers
C.
The currency conversion rate when buying and selling goods
D.
The measure of an organization's effective use of inventory
Answers
D.
The measure of an organization's effective use of inventory
Suggested answer: A

Explanation:

Cash-to-cash conversion time is a key performance metric that measures the efficiency of a company's cash flow cycle:

Material Acquisition to Sales: It starts from the time cash is spent to acquire raw materials and ends when the company receives payment for the finished goods.

Inventory Management: Efficient inventory management reduces the time materials sit as inventory, speeding up the conversion cycle.

Production Efficiency: Streamlining production processes shortens the time products are manufactured and ready for sale.

Receivables Management: Effective receivables management ensures quick collection of payments, reducing the overall cash-to-cash cycle time.

Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. J. (2016). Supply Chain Management: A Logistics Perspective. Cengage Learning.

Lambert, D. M., & Cooper, M. C. (2000). Issues in Supply Chain Management. Industrial Marketing Management, 29(1), 65-83.

asked 16/09/2024
Ben Spiers
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