fbpx

Cash conversion cycle | Business & Finance homework help

Don't use plagiarized sources. Get Your Assignment on
Cash conversion cycle | Business & Finance homework help
Just from $13/Page
Order Now

Cash conversion cycle

The text identifies three principal components that jointly comprise the cash conversion cycle.  The cash conversion cycle is defined as the average length of time a dollar is tied up in current assets, and it is determined by the interaction between the production cycle (also called Days of Sales in Inventory), receivables collection period (also called Number of Days of Credit, Collection cycle, or Days of Sales Outstanding), and the accounts payable cycle (also called Days of Payable Outstanding).  Ideally, a company wants to minimize the cash conversion cycle as much as possible.  In some circumstances, a firm has a comparative advantage in working capital management because of the nature of its business.  We will look at the cash conversion cycles of companies and their implications.

In your initial response to the topic you have to answer all 6 questions.

.

  1. Go to http://finance.yahoo.com and get a quote for one company of your choice. On the left column, scroll down and select “Income Statement.”  Write down the annual sales, cost of goods sold, and depreciation expense for the most recent year. For some companies depreciation expense can be found in Cash Flow statement.
  2. Select the firm’s Balance Sheet. Write down the balances shown for the firm’s inventories, accounts receivable, and accounts payable.
  3. Using the information from parts a and b, calculate its inventory turnover, accounts receivable turnover, and accounts payable turnover. You should show your work! 
  4. Calculate production cycle (also called Days of Sales in Inventory), collection cycle (also called Number of Days of Credit or Days of Sales Outstanding), and accounts payable cycle (also called Days of Payable Outstanding)You should show your work! 
  5.  What is the company’s cash conversion cycle? You should show your work! Please note that there is a typo in the textbook. The correct formula is

    CCC = DSI + DSO – DPO


  6. Discuss the results that you receive in one paragraph. Should the company decrease cash conversion cycle? Please explain your answer.

Recent Blog Posts

No recent articles to show.

Other Blog Posts

What are the key elements of an essay

You may clearly understand what an essay is and have had the experience of writing a number. However, it is […]

Feb 25th, 2022

How to write a research paper fast

The day inevitably comes; you need to submit your assignment. You have been procrastinating on writing your paper until the […]

Feb 24th, 2022

220+ best humanities research paper topics

Choosing a paper topic can be a daunting task for any assignment. A student may face agony trying to come […]

Feb 24th, 2022

How to write a media analysis essay

The media is an integral part of modern society. Think of what would happen to the world if there were […]

Feb 23rd, 2022

Great tricks on how to write a hypothesis in 2022

A hypothesis is a statement that can be proven by scientific research. It proves the theory of action and reaction, […]

Feb 22nd, 2022

How to get better at math

Math is not difficult. However, it is complex and tough compared to other subjects and requires a little bit more […]

Feb 22nd, 2022