Assume that you have been engaged by Honeybee Company as a Finance Executive. The company is...
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Assume that you have been engaged by Honeybee Company as a Finance Executive. The company is currently facing a problem in managing its working capital efficiently. Before taking any necessary action to mitigate this issue, you were given the following information for analysis purposes. Accounts receivables (AR) collection = 50 days after credit sales are made. Average cost of goods sold = RM200,000. Closing inventory = RM30,000. Instructions: a. Determine the company's cash conversion cycle (CCC). Based on the result, comment about the company's condition with a supporting example. (8 marks) b. Explain to the top management of the company regarding the THREE (3) main working capital financing policies that the company could consider adopting in the future to improve its working capital management. Support your answer with a scenario example. Assume that you have been engaged by Honeybee Company as a Finance Executive. The company is currently facing a problem in managing its working capital efficiently. Before taking any necessary action to mitigate this issue, you were given the following information for analysis purposes. Accounts receivables (AR) collection = 50 days after credit sales are made. Average cost of goods sold = RM200,000. Closing inventory = RM30,000. Instructions: a. Determine the company's cash conversion cycle (CCC). Based on the result, comment about the company's condition with a supporting example. (8 marks) b. Explain to the top management of the company regarding the THREE (3) main working capital financing policies that the company could consider adopting in the future to improve its working capital management. Support your answer with a scenario example.
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Related Book For
Accounting Principles
ISBN: 978-1118342190
11th Edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
Posted Date:
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