Leyton Lumber Company has sales of $12 million per year, all oncredit terms calling for payment within 30 days, and its accounts receivable are $1.5 million.What is Leyton’s DSO, what would it be if all customers paid on time, and how much capitalwould be released if Leyton could take action that led to on-time payments?

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A:

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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.