Explain ways in which executive decisions regarding the CCC and net working capital can affect a...
Explain ways in which executive decisions regarding the CCC and net working capital can affect a company both adversely and beneficially.
Homework Answers
CCC is the days require to convert cash as investment to cash as
Revenues.
Cash conversion Cycle = Days Inventory Outstanding + Days Sales
Outstanding - Days Payable outstanding
It is the measure of the operational efficiency of company
Adverse affects of higher CCC and poor Working Capital
Management
1. The liquidity or cash with the company would be low.
2. The creditors won't get paid on time and they might get
demotivated to carry on the business with the company.
3. They might default in payment to short term lenders.
4, There might be a pile up of inventory in the company ,
Beneficial affects of lower CCC and better Working Capital
management.
1. Cash or investment don't get locked up.
2. Companies payoff their creditors on debt and even can get trade
discounts .
3. Storage and holding costs for investory get minimised.
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Explain ways in which executive decisions regarding the CCC and
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Why is understanding the relationship between the cash conversion cycle (CCC) and net working capital important to the contemporary business executive? Explain ways in which executive decisions regarding the CCC and net working capital can affect a company, both adversely and beneficially. Support your response with a specific example from the business world.
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Why is understanding the relationship between the cash conversion cycle (CCC) and net working capital important to the contemporary business executive? Explain ways in which executive decisions regarding the CCC and net working capital can affect a company, both adversely and beneficially. Support your response with a specific example from the business world.
Why is understanding the relationship between the cash conversion cycle (CCC) and net working capital important to the contemporary business executive? Explain ways in which executive decisions...
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