Given that:
Inventory Conversion Period = 40 days
Receivables Collection Period = 17 days
Payable Deferral Period = 25days
Then,
Cash Conversion Cycle = Inventory Conversion Period + Average Collection Period - Payables Deferral Period
Cash Conversion Cycle = 40 days + 17 days - 25 days
Cash Conversion Cycle = 32 days
Therefore, the firm's Cash Conversion Cycle is 32 days
