Purchase Solution

Cash Conversion Cycle

Not what you're looking for?

Ask Custom Question

Conversion Cycle. What effect will the following have on the cash conversion cycle?

a. Customers are given a larger discount for cash transactions.
b. The inventory turnover ratio falls from 8 to 6.
c. New technology streamlines the production process.
d. The firm adopts a policy of reducing outstanding accounts payable.
e. The firm starts producing more goods in response to customers' advance orders instead
of producing for inventory.
f. A temporary glut in the commodity market induces the firm to stock up on raw materials
while prices are low.

Purchase this Solution

Solution Summary

The solution explains the effect on cash conversion cycle of various actions taken by the company

Solution Preview

The cash conversion cycle is - Accounts Receivable Period + Inventory Period - Accounts Payable Period.

a. If cash discount is increased, customers may prefer to pay cash then to take credit. The Accounts Receivable would fall and ...

Purchase this Solution


Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.