In and organisation cash sales are 25% and the balance are on credit. 60% credit sales are collected next month after sales, 30% in the second month and 10% in the third month. There are no bad debts. The sales for October 2013 are Rs 12 lakhs, November 2013 Rs 14 lakhs, December 2013 Rs 16 lakhs, January 2014 Rs 6 lakhs February 2014 Rs 8 lakhs. The cash collected in February from debtors would be: a. Rs 15 lakhs b. Rs 9.80 lakhs c. Rs 7.35 lakhs d. Rs 0.80 lakhs

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.