Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The management at Galaxy Corp, wants to continue its internal discussions related to its cash management. One of the finance team members presents the following

image text in transcribed
The management at Galaxy Corp, wants to continue its internal discussions related to its cash management. One of the finance team members presents the following case toher cohorts: Case in Discussion Komatsu Motors Inc.'s management plans to finance its operations with bank loans that will be repaid as soon as cash is available. The company's management expects that it will take 60 days to manufacture and sell its products and 50 days to receive payment from its customers. Kumatsu Motors Inc.'s CFO has told the rest of the management team that they should expect the length of the bank loans to be approximately 110 days. Which of the following responses to the CFO's statement is most accurate? The CFO's approximation of the length of the bank loans should be accurate, because it will take 110 days for the company to manufacture, sell, and collect cash for its goods. All these things must occur for the company to be able to repay its loans from the bank. The CFO is not taking into account the amount of time the company has to pay its suppliers. Generally, there is a certain length of time between the purchase of materials and labor and the payment of cash for them. The CFO can reduce the estimated length of the bank loan by the amount of time. Is it possible for a firm to have a negative CCC

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Short Term Financial Management

Authors: Terry S. Maness, John T. Zietlow

2nd Edition

0030315131, 978-0030315138

More Books

Students also viewed these Finance questions

Question

Propose structures for compounds G-I: concd HNO heat 60-65 OH

Answered: 1 week ago

Question

How to reverse a Armstrong number by using double linked list ?

Answered: 1 week ago