Managing the cash conversion
Not what you're looking for?
Explain to management why monitoring and managing the cash conversion cycle is important to the overall profitability of the company.
Purchase this Solution
Solution Summary
This discusses the importance of monitoring and managing the cash conversion
(The solution has only Book reference)
Solution Preview
Operating Cycle is defined as the time duration, which the firm requires to manufacture and sell the product and collect cash. Thus operating cycle refers to the acquisition of resources, conversion of raw materials into work-in-process into finished goods, conversion of finished goods into sales and collection of sales. Larger is the operating cycle, larger will be the investment in current assets.
In practice, firms are acquiring resources on credit. To that extent, firm's need to raise working finance is reduced. Net Operating Cycle is used for the difference between operating cycle (or gross operating cycle) and the payment deferral period (or the period for which creditors remain outstanding).
Operating Cycle (OC) = Inventory Conversion Period + ...
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Operations Management
This quiz tests a student's knowledge about Operations Management
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.