Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Working capital cycle measures the time between paying for goods supplied to you and final receipt of cash to you from their sale. It is desirable to keep this cycle as short as possible as it increases the effectiveness of working capital. The figure below demonstrates how the cycle works.
The table below explains how the activities of a business have an impact on cash flow.
TRADE PROCESS
EFFECTS ON CASH
Inventories are purchased on creditthat creates trade payables.
Inventories bought on credit temporarily help with cash flowas there is no immediate to pay for these inventories.
Sale of inventories ismade on credit which creates trade receivables.
It means that there is no cash inflow although inventory had been sold. The cash for sold inventory would be received later.
Trade payables need to be paid, and cash is collected from the trade receivables.
Cash has to be collected from the tradereceivables and then paid to trade payables otherwise there is a cash flow problem.
Control of working capital is ensuring that company has enough cash in its bank. It will save on bank interest and charges on overdrafts. Company also needs to ensure that levels of inventories and trade receivables isn't too great, as this means funds are tied up in assets with no returns (termed as the opportunity cost).
Working capital cycle thus should be kept to a minimum to ensure efficient and cost effective management.
Working capital cycle in a manufacturing business Average time raw materials are in stock + Time taken to produce goods + Time tak
Question The variance of Stock A is .004, the variance of the market is .007 and the covariance between the two is .0026. What is the correlation coefficient?
What do you notice about the alphas and betas calculated using the various methods? Using the alpha and beta you calculated for stock 4 along with the average excess return on the
A new capital investment that will cost $2.5 million and will generate perpetual net cash flows of $400,000 a year. Investors could expect to earn 8 percent elsewhere while taking
Current ratio (CA) or working capital ratio CA = Current assets/Current liabilities (times) Current ratio measures the short term solvency or liquidity; it signifies the ext
Q. Show the Symptoms of overtrading? Symptoms of overtrading • Fast sales growth. • Increasing trade payables. • Increasing trade receivables. • Fall in cash bal
Question 1: a) Explain clearly the three concepts of elasticity of demand. b) Using these concepts, explain and comment on the strategies you would recommend for increasi
An investment will require a $1.0 million cash outlay. It will generate perpetual net cash inflows of $115,000 a year. Investors could earn 9 percent elsewhere by taking the same
Question 1: (a) Explain the Law of One Price and discuss its limitation in explaining exchange rates. (b) According to you, what factors determine exchange rates in the long
what is the applicability of an operating cycle in vegetable growing?
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd