1. The larger cash conversion cycle means company will receive more cash. True False 2. If...

1. The larger cash conversion cycle means company will receive more cash.

True

False

2. If the cash balance falls below target cash balance, the firm may need short-term financing.

True

False

Expert Solution

A) The statement is False

The shorter the cash conversion cycle the faster a company collects cash. Cash conversion cycle does not determine the quantum of cash but the speed with which it is converted into current assets and converted back to cash

B) The statement is True

When the cash balance falls below the target cash balance a company may have to resort to short term financing to bring the cash balance upto the level of target balance

jeff jeffy answered 2 years ago

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