Characteristics of current assets, Managerial Accounting

Assignment Help:

Working Capital management is affected through two characteristics of current assets that are as follows (i) short life span (ii) swift transformation in the other asset forms.

Current assets consist of a short life span, cash balances can stay idle for 7 to 14 days, whereas accounts receivable generally have a life span ranging from 30-90 days and inventories may be conducted for 30 to 100 days.

All current assets are transformed in another current asset. This transformation will base upon the time and degree of synchronization of sales, production, procurement and also collection of receivables.

The production method begins with the purchase of raw material resulting in either reduce in cash or creation of accounts payable. The raw material purchased by the inventory that is further processed to generate finished goods. Finished goods are sold resulting in either raise in cash or creation of accounts receivable whereas the discharge of accounts payable outcomes in cash outflow. The operating cycle and the current asset cycle are demonstrated in figures 1 and 2 correspondingly.

1718_CHARACTERISTICS OF CURRENT ASSETS.png

Figure: Current asset cycle

730_CHARACTERISTICS OF CURRENT ASSETS1.png

Figure: Operating Cycle


Related Discussions:- Characteristics of current assets

Select the cost driver-cost estimating relationship, Select the cost driver...

Select the cost driver(s): This might also be termed to as independent, explanatory or predictor variable. A cost driver can be stated as any factor whose change causes a chang

Overhead rate , During 2010, Jackson Company estimated that its manufacturi...

During 2010, Jackson Company estimated that its manufacturing employees would work 80,000 direct labor hours. During the year the company actually worked 75,000 direct labor hours.

Evaluate a proposed investment, Q. Evaluate a proposed investment? BMP ...

Q. Evaluate a proposed investment? BMP Consulting (BMPC) conducted an analysis of Delta Corp. and found that the firm consists of two different divisions: Pet Lovers, a pet sup

Excel formulas, I only need the formulas in excel put in.

I only need the formulas in excel put in.

Calculate the net operating income , calculate the net operating income ,  ...

calculate the net operating income ,  evergreen corp has provided the following data: sales per period 1000 units ,selling price $ 40 per unit , variable manufacturing cost 12 p

Explain the quick ratio - liquidity ratios, Quick ratio Meaning: this...

Quick ratio Meaning: this ratio establishes a relationship among quick assets and current liabilities Objective: the objective of commuting this ratio is to calculate th

Classification of costs, discuss which of the cost classification is suitab...

discuss which of the cost classification is suitable for LunchBreak LTD and why?

[email protected], Why might managers favour this ABC system instea...

Why might managers favour this ABC system instead of the older system that allocated all MOH costs on the basis of direct? labour?

Illustrate thedifference between a fixed and flexible budget, Difference be...

Difference between a fixed and flexible budget Fixed budget A fixed budget remains the same irrespective of changed situations. It remains inflexible even if volume of

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd