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In: Finance

What are some actions a firm can take to shorten its cash conversion cycle? What are...

  1. What are some actions a firm can take to shorten its cash conversion cycle?

  1. What are some costs associated with high inventories? With low inventories?

  1. What is a “supply chain” and how are supply chains related to just-in-time inventory procedures?

  1. Explain how a new firm’s receivables balance is built up over time.

Solutions

Expert Solution

firm can shorten its cash conversion cycle by efficiency in use of its collection period from the debtors so it will be trying to collect its account receivable as soon as it can.

Firm can also lower the cash conversion cycle by lowering down the inventory conversion days to sales and it can also increase the accounts payable dates so it will have optimum liquidity.

2. Some of the cost associated with high inventory is are higher storage cost and higher wasted costs and cost associated with low inventory is loss of sales

3. Supply chain is a chain of supplies which are related to the producers and suppliers and manufacturing used to supply them to the market and it will mean that they are trying to to cater to the needs of the consumers by delivering their products quickly.

Just in time inventory will be related to managing with proper need of the people in quick amount of time so there will be lack of loss of opportunities.

4. Receivables of the new firm balance is built over time BECAUSE debtors are not providing them with money at the time intervals and it is leading into a collection of their account receivables for the longer period of time.

jeff jeffy answered 1 year ago
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