Question

In: Finance

a) how does working capital management such as using the cash conversion period and  operating period help...

a) how does working capital management such as using the cash conversion period and  operating period help the company

b)capital structure and dividends helps the company to ------------------------------

c) Dividend policy helps the company to - ----------------------------------

Solutions

Expert Solution

A. Cash conversion period is always important in order to maintain the liquidity and operating period will also help in realisation of quicker cash and wastage of lower material so this both metrics are used for helping the company in order to increase their efficiency and increase their liquidity so that the company will be having a higher flexibility in their hand because better cash conversion period will mean that the company will be having a better liquidity and lower operating period will mean that the company can easily convert its inventory to sales.

B. Capital structure and dividend help the company to maximize the rate of return by deciding upon how much to invest and how much to distribute as dividend as capital structure will be consisting of their capital and equity capital and it will also include the optimum structure of both the capital.

C. Dividend policy help the company to take decision in respect to dividend payment and reinvestment into the business which will maximize the rate of return of the business.


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