Question

What are seven actions that will make strategies to shorten the cash conversion cycle short-lived.

1. Lost sales due to overly strict credit and collection standards

2. ???

3. ???   

4. ???

5. Higher prices assessed by vendors because individual orders are smaller or payment is slower

6. Refusal to sell to customers who are good credit risks but are occasionally slow in paying

7. Excessive reliance on accounts payable in lieu of a stable base of short-term bank credit

What are two decisions a financial manager makes when establishing a framework for working capital investment and financing.

1. How much working capital to have

2. ???

Describe the three characteristics of a restrictive investment strategy.

1. ???

2. Managing raw materials as tightly as possible using JIT inventory techniques

3. Maintaining low levels of outstanding accounts receivable and cash balances

Answer 1

to shorten the cash conversion cycle short-lived.

1. Lost sales due to overly strict credit and collection standards

2. Businesses can shorten a cash cycle by lengthening the amount of time its accounts payable remain outstanding

3.Companies can also shorten their cash cycles by turning over their inventory faster.

4.Companies can shorten this cycle by requesting upfront payments or deposits and by billing as soon as information comes in from sales5. Higher prices assessed by vendors because individual orders are smaller or payment is slower

6. Refusal to sell to customers who are good credit risks but are occasionally slow in paying

7. Excessive reliance on accounts payable in lieu of a stable base of short-term bank credit

What are two decisions a financial manager makes when establishing a framework for working capital investment and financing.

capital budgeting decision

capital structure decision

How much working capital to have

Describe the three characteristics of a restrictive investment strategy.

1.balanced funds

2. Managing raw materials as tightly as possible using JIT inventory techniques

3. Maintaining low levels of outstanding accounts receivable and cash balances