The cash conversion cycle has three components: (1) average age of inventory, (2) average collection period, and (3) average payment period. The cycles length determines the time that resources are tied up in the firms day-to-day operations. The firms investment in short-term assets often consists of both perma-nent and seasonal funding requirements. The seasonal requirements can be financed using either an aggressive (low-cost, high-risk) strategy or a conservative (high-cost, low-risk) strategy. The cash conversion cycle funding strategy ultimately depends on managements disposition toward risk and the strength of the firms banking re-lationships. To minimize its reliance on negotiated liabilities, the financial manager seeks to (1) turn over inventory as quickly as possible; (2) collect accounts receivable as quickly as possible; (3) manage mail, processing, and clearing time; and (4) pay accounts payable as slowly as possible. Use of these strategies should minimize the length of the cash conversion cycle.