Net Working Capital and Cash Conversion Cycle
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What is Net Working Capital? How is this related to the cash conversion cycle? Describe what each component of the cash conversion cycle means (inventory period, receivables period and payable period).
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Net Working Capital and Cash Conversion Cycle are discussed.
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Net Working Capital means the difference between current assets and current liabilities, and therefore, represents that position of current assets, which the firm has to finance either from long-term funds or bank borrowings.
The cash conversion cycle will determine the net working capital of the firm. Cash conversion cycle is difference between operating cycle (or gross operating cycle) and the payment deferral period ...
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