Question

explain the cash conversion cycle .describe the cscc for your employer or company in an industry in which you are interested. what are some specific things that your company could do to decrease your cash conversion cucle

Answer 1

Cash conversion cycle is a cycle which reflects the capability of company to convert various components of its books of accounts to cash so company should always try to convert various types of current assets and current liabilities quickly into cash which will reflect the overall ability of the company in order to realise the cash and it will also help the company to have an additional liquidity on its hands.

Cash conversion cycle for my industry is related to retailing industry and in retail Industry, there is a high amount of credit which is being provided for various debtors, so there is a need to collect these account receivable quickly so there will be a higher liquidity in the hands of company.

specific things company can do in order to decrease the overall cash conversion cycle in order to improve the liquidity would be to provide various kinds of discounts and other scheme which will lure these debtors to pay on time and the company can also provide for late payments for the account payables, which will give it additional benefit by providing it with additional liquidity.