Rodrigo Silva recently completed his masters degree in tax law. Invited to join an important international law firm, he is reflecting on the managerial aspects of the firm because the technical capacity and professional competence of the other lawyers and partners of the firm, is unquestionable. The company usually wins the causes for which it is hired with gallantry. The financial liquidity of the office is what concerns the young barrister: the causes demand high cash outflows in costs of notary and records, in team trips, in salaries of the administrative staff of the office, of the hired lawyers and of the trainees. Revenues, although high, are limited to the percentages charged for overdue claims, the cost of lost claims and the fees for consultancy projects. Expenses occur throughout all processes, and revenues only at the end of each cause or consultancy project. The company pays its bills with an average term of 30 days. Revenues, despite fluctuating considerably, are received on average 15 days after the end of the causes or the delivery of projects. The average time for a cause is 180 days and for a project, 90 days.

a. is it possible to calculate the cash cycle and operating cycle of this company?

b. What are the necessary requirements for the technical competence of the firm to not succumb in the face of short-term financial adversities?

c. Calculate the operating cycle and the cash cycle, in case the company is due 30% of projects and 70% of the causes.

d. What is the cash turnover?

Answer rating: 100% (QA)

The cash conversion cycle CCC is a metric that expresses the time measured in days it takes for a company to convert its investments in inventory and other resources into cash flows from sales Also ca... View the full answer