The Gemini Corporation was operating its business as per the following working capital cycle days: Scenario A
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Question:
The Gemini Corporation was operating its business as per the following working capital cycle days:
Scenario A
- Average age of inventory - 40 days
- Average collection period - 60 days
- Average payment period - 50 days
They have now recruited a consultant who advised them to reduce their total cash cycle. She proposed a new business model with the following working capital cycle days. Scenario B is indicated below:
- Average age of inventory - 15 days
- Average collection period - 5 days
- Average payment period - 50 days
Calculate the following:
1. Total cash cycle
2. Cash conversion cycle, for scenarios A & B
What are the benefits of negative CCC over positive CCC?
Related Book For
Principles of managerial finance
ISBN: 978-0132479547
12th edition
Authors: Lawrence J Gitman, Chad J Zutter
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