Answer :
Final answer:
The cash conversion cycle of Gear Corporation is calculated by adding the inventory conversion period to the receivables collection period and then subtracting the payables deferral period. This results in a cash conversion cycle of 79.4 days for the Gear Corporation.
Explanation:
The cash conversion cycle (CCC) of a company is a key measure of its operational efficiency. It illustrates the time (in days) it takes for a company to convert resource inputs into cash flows. The formula used to calculate the cash conversion cycle is as follows:
CCC = Inventory conversion period + Receivables collection period - Payables deferral period
Using the given data, this would mean:
CCC = 68.2 days (Inventory Conversion Period) + 35.8 days (Receivables Collection Period) - 24.6 days (Payables Deferral Period)
So, the Cash Conversion Cycle of the Gear Corporation would be 79.4 days.
Learn more about Cash Conversion Cycle here:
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