Florida Distributors have a high cash conversion cycle (CCC); 47 days compared to industry average of 25 days.
a) What would you recommend to this company to shorten its cash conversion cycle (CCC)?
b) How is reduction in CCC going to effect the profitability of this company?
c) Florida Distributors tries to match the maturity of its assets and liabilities. Describe how this company could adopt a more aggressive or a more conservative financing policy.
The cash conversion cycle comprises of (Receivable Days + Inventory Days) - Payable Days.