Series 79 practice questionhardFinancial Statement Analysis
Which of the following most directly improves a company's cash conversion cycle?
- AIncreasing days sales outstanding
- BIncreasing inventory days
- CReducing days payable outstanding
- DDecreasing days sales outstanding✓ Correct answer
Explanation
Why D — Decreasing days sales outstanding
Decreasing days sales outstanding improves the cash conversion cycle by accelerating cash inflows. Reducing days payable outstanding shortens the time to pay suppliers, which worsens the cycle.
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