The operating cycle for: Amazon = 85 days Walmart = 60 days The cash cycle for:...

The operating cycle for:

Amazon = 85 days

Walmart = 60 days

The cash cycle for:

Amazon =95 days

Walmart =15 days

Q1/ What does the operating and cash cycle tell us about each company? Which company is doing better with their working capital management?

Q2/ What recommendations would you make to the other company(s) to improve its working capital management?

Expert Solution

1. Operating cycle will be reflecting the ability of the company in order to produce the goods and sells the goods and receive the cash from operation from the the data so it will be reflecting the overall operational cycle of the company from production of the goods to the receipt of the money from the customers for exchange of goods.

Cash Cycle will just be telling about the cash efficiency and receipt of cash as quickly as possible.

Walmart is doing well when it comes to operating cycle because its operating cycle is lower

Walmart is doing well if it is considered in case of cash receipt cycle because it will be reflecting lower cash cycle.

2. I will be advising Amazon to improve its working capital efficiency because it is not able to have a higher liquidity on its hands because of higher operating cycle and higher cash cycle so it should be trying to develop its efficiency towards the betterment of working capital and have higher amount of quick Assets and current assets on its hands.

jeff jeffy answered 1 year ago

Calvani, Inc., has a cash cycle of 44.5 days, an operating cycle of 65 days, and...

Calvani, Inc., has a cash cycle of 44.5 days, an operating cycle of 65 days, and an inventory period of 28 days. The company reported cost of goods sold in the amount of $344,000, and credit sales were $567,000. What is the company’s average balance in accounts payable and accounts receivable? Average accounts payable $ _______ Average accounts receivable $______

Betty's Bagels has a cash cycle of 15 days, an operating cycle of 32 days, and...

Betty's Bagels has a cash cycle of 15 days, an operating cycle of 32 days, and an inventory period of 1.5 days. The company reported cost of goods sold in the amount of $102,000, and credit sales were $206,000. What is the company's average balance in accounts payable? Select one: a. $18,414.36 b. $4,843.84 c. $4,750.65 d. $21,918.00 e. $9,594.52

Calculate the operating cash cycle in days if all sales are for cash, inventory is turned...

Calculate the operating cash cycle in days if all sales are for cash, inventory is turned over 7 times a year and creditors are paid on average 5 times a year. Select one: a. -52.1 days b. -20.9 days c. 52.1 days d. 20.9 days

Chasteen Hall currently has 61 days in its cash cycle and 143 days in its operating...

Chasteen Hall currently has 61 days in its cash cycle and 143 days in its operating cycle. The firm purchases its inventory from one supplier. This supplier has offered a 5 percent discount to the firm if it will pay for its purchases within 15 days instead of the normal 38 days. If the firm opts to take advantage of the discount offered, its new operating cycle will be _____ days and its new cash cycle will be _____ days.

the conversion cycle period is 24 days and the operating period is 23 days for Company...

the conversion cycle period is 24 days and the operating period is 23 days for Company tiger another company (m) has 57 days for operating period and 69 days for conversion cash period what are the differences and similarities and compare it

Business operating cycle. Kolman Kampers has a production cycle of 33 days, a collection cycle of...

Business operating cycle. Kolman Kampers has a production cycle of 33 days, a collection cycle of 19 days, and a payment cycle of 12 days. What are Kolman's business operating cycle and cash conversion cycle? If Kolman reduces the production cycle by 1 days, what is the effect on the cash conversion cycle? If Kolman decreases the collection cycle by 1 days, what is the effect on the cash conversion cycle? If Kolman increases the payment cycle by 1 days,...

Describe the operating cycle and cash cycle. What are the differences?

1) What is the operating cycle and inventory turnover ratio? Balance sheet: Assets cash 60 A/R...

1) What is the operating cycle and inventory turnover ratio? Balance sheet: Assets cash 60 A/R 100 Inventory 80 Fixed Asset 100 (Accum Depr) -25 Total 315 Liabilities AP 40 Accruals 10 Notes Pay 15 L-T Debt 150 Total Debt 215 Equity 100 Total Liab & Equity 315 Income Statement: Sales $700 COGS $315 Gross Profit $385 Operating Expense 125 Depreciation 30 EBIT $230 Interest 20 Taxes 75 Net Profit $135 Dividends 30 2) The sum of the delays in...

Consider the operating cycle to answer the following questions. Operating Cycle cash-- settle payables -- Account...

Consider the operating cycle to answer the following questions. Operating Cycle cash-- settle payables -- Account Payable-- purchases -- Buy with payables-- inventories -- sales-- accounts receivable -- returned to cash -- (Again the cycle repeat) --- Cash Why might a company want to reduce its cash conversion cycle? (Hint: Consider the financial statement implications of reducing the cash conversion cycle.) How might a company reduce its cash conversion cycle? Examine and discuss the potential impacts on customers and suppliers...

Introduce companies – (Amazon, Walmart, Target, eBay)

Question