If you randomly chose a sample of firms and then calculated the operating cycle (OC) of each firm, what is likely to be the key cause of differences in their operating cycles? What goal should these firms attempt to achieve with regard to their OCs? How and why?
Answer to relevant QuestionsWhy would a firm wish to minimize its cash conversion cycle (CCC) even though each of its components is important to the operation of the business? What key actions should the firm pursue to achieve this objective? What trade-off confronts the financial manager with regard to inventory turnover, inventory cost, and stockouts? In what way is inventory viewed as an investment? For a firm contemplating an increase in the cash discount it offers credit customers for early payment, what key variables should be considered when quantitatively analyzing this decision? How do the variables used in this ...Calculate the average investment in inventory for each of the following situations. Assume a 365-day year. a. The firm’s annual sales were $18 million, its gross profit margin was 32%, and its average age of inventory is ...Webb Inc. currently makes all sales on credit and offers no cash discounts. The firm is considering offering a 2% cash discount for payments within 10 days. The firm’s current average collection period is 65 days, sales ...
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