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?

Solutions

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

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

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