Purpose of AssignmentThe purpose of this assignment is to help students gain a better understanding...

Question

Purpose of AssignmentThe purpose of this assignment is to help students gain a better understanding of calculations of cash flow and strategies to increase it.Assignment StepsSelecta multinational company from the following industries:RetailPharmaceuticalComputer HardwareManufacturingAutomotiveReviewthe selected company's most recent financial statements.Calculatethe following cash conversion cycle ratios based on the financial statements usingMicrosoft®Excel®:Average inventoryInventory turnover rateAverage account receivableAccount receivable turnoverAverage collection cycleExplainin 700 words the importance of the cash conversion cycle, including:Discuss the purpose of the cash conversion cycle and its components.Analyze the results obtained in the cash conversion cycle equations.Propose strategies to increase the cash flows of the company under study.Formatyour paper consistent with APA guidelines.

Charanjeet · Accepted Answer

Explain in 700 words the importance of the cash conversion cycle, including:
Discuss the purpose of the cash conversion cycle and its components. Analyze the results obtained in the cash conversion cycle equations. Propose strategies to increase the cash flows of the company under study.
The Cash Conversion Cycle (CCC) tells us the time for which the funds of any particular company tied up. It calculates the time in between the payment made to suppliers for raw material and cash released from the sales of finished goods. This cycle starts when cash is paid to suppliers and then finished goods are sold either on cash or credit basis, for goods sold on credit account receivables are maintained and they are converted to cash later on when payment is released from them. The time required between cash paid and actual cash received is very important as the short term liquidity of a company to meet expenses depend on cash which depend on cash conversion cycle. The decreased CCC over number of years of any company is a good sign, whereas the increased one over number of years is alarming sign. The purpose of CCC is to calculate whether company can acquire the required raw material and then sell the resultant finished product and convert those sales into cash before the creditors’ payment due. If it is able to do it, then the short term liquidity of company is good, it do not have to resort to outer sources for meeting its expenses .If it is not able to recover cash before payment due to creditors,

Purpose of Assignment The purpose of this assignment is to help students gain a better understanding of calculations of cash flow and strategies to increase it. Assignment Steps Select a multinational...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment