Increasing net operating asset turnover requires some combination of increasing sales and/or decreasing net operating assets. For
Question:
Increasing net operating asset turnover requires some combination of increasing sales and/or decreasing net operating assets. For the latter, many companies consider ways to reduce their investment in working capital (current assets less current liabilities). This can be accomplished by reducing the level of accounts receivable and inventories, or by increasing the level of accounts payable.
REQUIRED
a. Develop a list of suggested actions to achieve all three of these objectives as manager.
b. Examine the implications of each. That is, describe the marketing implications of reducing receivables and inventories, and the supplier implications of delaying payment. How can a company achieve working capital reduction without negatively impacting its performance?
Step by Step Answer:
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman