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

Financial management, discuss the applicability of an operating cycle in ve...

discuss the applicability of an operating cycle in vegetable growing in a low developed country like Uganda- Africa

Procedure of material acquisition, Procedure of material acquisition A ...

Procedure of material acquisition A stores record is maintained into which the quantity and value of materials received is entered. Issues of materials to production are made b

Determining optimum cash balance, One of the main deities of the financial ...

One of the main deities of the financial manager is to keep a sound liquidity position for the firm hence the dues are settled as and while they mature. Separately from this the fi

Show the pricing during market growth, Q. Show the Pricing during market gr...

Q. Show the Pricing during market growth? Pricing during market growth: in the growth stage there is steep rise in the turnover of the company. As prices of new competitors

Research and writing assignment, Write a response to your boss, the control...

Write a response to your boss, the controller. The response should be 2-5 pages in length (double-space). Your response to the controller should include, but not be limited to, t

Operating cycle period, Period of operating cycle implies that total sum of...

Period of operating cycle implies that total sum of number of days included in the various stages of operation commencing from the purchase of raw materials and ending along with c

Advance factoring and maturity factoring, Advance Factoring and Maturity Fa...

Advance Factoring and Maturity Factoring: In both recourse and non-recourse factoring whether the factor advances cash against book debts to the client instantly on assignment

Planning, Planning A business must plan for its success. What do w...

Planning A business must plan for its success. What do we understand by business planning? It is about thinking in advance -- to decide on a course of the action to reach

Positioning, Positioning An essential part of the planning process is p...

Positioning An essential part of the planning process is positioning the organization to attain its goals. Positioning is a wide concept and depends on gathering and evaluating

Summary journal entries, Stine Company uses a job order cost system. On May...

Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,730 and two jobs in process: Job No. 429 $2,150, and Job No. 430

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