Purchase Solution

Strategies to Optimize the Cash Conversion Cycle

Not what you're looking for?

Ask Custom Question

What strategies can a firm use to optimize its cash cycle?

Purchase this Solution
Solution Summary

This solution dissects the elements of the cash conversion cycle and offers suggestions to optimize its cash collections (or to minimize its cash losses) regarding each element.

Solution Preview

The cash cycle is the amount of time between the firm's outlay of funds for inventory (or services, if it is a service company) and the collection of funds from customers. By optimizing the cash cycle, the firm has more cash available to invest, and for a longer period of time, thus maximizing its returns.

The best purchasing strategy to minimize the amount of cash tied up in inventory is to adopt a "just-in-time inventory" (JIT) strategy. ...

Purchase this Solution
Free BrainMass Quizzes
Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

View More Free Quizzes
Related BrainMass Solutions

  • Cash conversion cycle

    75838 Cash conversion cycle The three overall strategies for effective and efficient management of cash include inventory, accounts receivables and accounts payable.

  • P16-11 Negus Cash Conversion Cycle

    560249 P16-11 Negus Cash Conversion Cycle P16-11 Negus Cash Conversion Cycle Inventory conversion period of 50 days Average collection period of 35 days Payables deferral period of 25 days Costs of goods sold is 80% of it's sales.

  • Operating cycle (OC)and cash conversion cycle (CCC)

    If Leal can optimize Casa de Diseño's operations according to industry standards, what will Casa de Diseño's operating cycle (OC), cash conversion cycle (CCC), and resource investment need to be under these more efficient conditions? c.

  • Cash conversion cycle

    (Cash conversion cycle) Dennis Lasser has collected some information about a food wholesaler in order to estimate its cash conversion cycle. The accumulated information is given. What will Dennis find the cash conversion cycle to be?

  • Cash Conversion Cycle Problem

    (a) Calculate Coffee Mill's Cash Conversion Cycle. (b) If Coffee Mill were to shorten its inventory conversion period by 10 days, what effect would this have on the Cash Conversion Cycle?

  • Cash Conversion Cycle

    Answer: No, this not an adequate cash conversion cycle because the company need cash to run its operating keeping cash ideal has opportunity cost so 155 days in cash conversion cycle is too much for the company to receive the cash after payments.

  • P13-1 Cash Conversion Cycle and Operating Cycle for American Products

    Calculate the amount of resources needed to support the firm's cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle. Please see the attached file a. Calculate the firm's operating cycle.

  • Cash conversion cycle

    Calculate the firm's cash conversion cycle. c. Calculate the amount of resources needed to support the firm's cash conversion cycle. d. Discuss how management might be able to reduce the cash conversion cycle.

  • Cash conversion cycle

    16743 Economics: Cash Conversion Cycle Cash Conversion Cycle. What effect will the following events have on the cash conversion cycle? a) Higher financing rates induce the firm to reduce its level of inventory.

View More Related Solutions