Question: 1. What is the difference between operating cycle and cash cycle? 2. How do the following changes in working capital terms affect the cash conversion

1. What is the difference between operating cycle and cash cycle?

2. How do the following changes in working capital terms affect the cash conversion cycle: (a) favorable credit terms that allow the firm to pay its trade creditors more slowly, (b) increase in inventory turnover and (c) decrease in accounts receivable turnover?

3. What do you mean by negative working capital? Explain with examples.

4. What are the mitigation measures available to a bank to prevent (i) over-trading and (ii) diversion risk?

5. XYZA Private Ltd calculates that its operating cycle for last year was 98 days. The trade debtors amounted to $460,000/- on sales of $2.21 million. Calculate the inventory holding period.

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