With regard to the cash conversion cycle, which of the following statements is correct?

The cash conversion cycle attempts to determine the amount of time necessary to convert revenue into an interest payment.

The cash conversion cycle attempts to gauge the effectiveness of the companys capital structure decision making.

The inventory conversion period is subtracted from the receivables collection period to arrive at the cash conversion cycle.

The cash conversion cycle gives an answer in terms of years.

The cash conversion cycle equals the average length of time that a dollar remains tied up in current assets.

Which of the following statements is not correct concerning the net advantage of leasing (NAL)?

The NAL can be positive even though the NPV for purchasing and the NPV of leasing can be negative.

If the asset must be acquired and the NAL is positive, you should lease.

If the acquisition of the asset had not been established, then even if the NAL is positive you may not want to lease.

If the NAL is positive, then as a manager you should always lease.

If the NAL is negative then you may still not want to buy the asset.

Which statement is correct?

When computing the NAL using the cost of debt is recommended because this is consistent with how we have conducted capital budgeting analysis by assigning specific financing costs.

The NAL will be bigger if the cost of debt is used.

The NAL will be bigger if the WACC is used.

The biggest cost benefit to leasing is recovery of the salvage value.

As it pertains to leasing, the irrelevancy result implies that whether you use the cost of debt or the WACC as the discount rate, it will not matter.