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.
Pythagoras Jones has just inherited $1,000,000 and wishes to invest this sum in the ?ve funds given below. Fund Name Code Return
Q. What do you mean by Acquistions - takeovers? Acquistions / takeovers: an essential feature of the merger through the absorption as well as consideration in the combination t
Inventory turnover is the reciprocal of inventory days. (Cost of sales/Average inventory)x number of times This shows how quickly inventory is being sold. It illustrates the
Intercorporate investments: DI has a 25% interest in a gold mine in the Yukon. They have held this investment for eighteen months. During this time it has not made any mon
Organisations involved in international trade and investment seek economic and political stability. For this reason it is prudent for those organisations to conduct a country risk
Working capital cycle for a trade Inventories days (time inventories are held before being sold) + Trade receivables days (how long the credit
I need help on few questions related to quantitative finance. Could you help me out in those.
Question What is the standard deviation of a portfolio which is comprised of $4,500 invested in stock S and $3,000 in stock T?
Q. What is Over-capitalisation? Over-capitalisation This is the opposite of over trading. It means a company has a large volume of inventories, cash balances and trade re
The expected return and risk involved in making an investment are important factors considered by investors. The expected return of a business can be influenced
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