Question
Question 3 The cash conversion cycle of a business represents the length of time between payment for stock and the receipt of cash from trade
Question 3
The cash conversion cycle of a business represents the length of time between payment for stock and the receipt of cash from trade debtors.
The following table gives information extracted from the annual accounts of a company for the current year:
|
|
| RM |
| Stock |
| 55,000 |
| Cash |
| 120,000 |
| Cost of Sales |
| 300,000 |
| Sales |
| 500,000 |
| Trade Debtors |
| 85,000 |
| Trade Creditors |
| 34,000 |
Required:
- Calculate the cash conversion cycle for the current year.
(12 marks)
- Discuss and comment on the cash conversion cycle calculated in part (a) above.
(5 marks)
- Discuss briefly on how to reduce the cash conversion cycle.
(8 marks)
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Essentials Of Health Care Finance
Authors: William O. Cleverley
3rd Edition
0834203413, 978-0834203419
