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Consider the operating cycle to answer the following questions. Operating Cycle cash-- settle payables -- Account Payable-- purchases -- Buy with payables-- inventories -- sales--
Consider the operating cycle to answer the following questions.
Operating Cycle
cash-- settle payables -- Account Payable-- purchases -- Buy with payables-- inventories -- sales-- accounts receivable -- returned to cash -- (Again the cycle repeat) --- Cash
- Why might a company want to reduce its cash conversion cycle? (Hint: Consider the financial statement implications of reducing the cash conversion cycle.)
- How might a company reduce its cash conversion cycle?
- Examine and discuss the potential impacts on customers and suppliers of taking the actions
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