GRADED DISCUSSION WEEK 1
Please note that if you edit your initial response (Original Post), you will not get credit for the Original Post. The discussions are set up as “Must post first”.
Cash conversion cycle
The text identifies three principal components that jointly comprise the cash conversion cycle. The cash conversion cycle is defined as the average length of time a dollar is tied up in current assets, and it is determined by the interaction between the production cycle (also called Days of Sales in Inventory), receivables collection period (also called Number of Days of Credit, Collection cycle, or Days of Sales Outstanding), and the accounts payable cycle (also called Days of Payable Outstanding). Ideally, a company wants to minimize the cash conversion cycle as much as possible. In some circumstances, a firm has a comparative advantage in working capital management because of the nature of its business. We will look at the cash conversion cycles of companies and their implications.
In your initial response to the topic you have to answer all 6 questions.
You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.
1. Go to http://finance.yahoo.com and get a quote for one company of your choice. On the left column, scroll down and select “Income Statement.” Write down the annual sales, cost of goods sold, and depreciation expense for the most recent year. For some companies depreciation expense can be found in Cash Flow statement.
2. Select the firm’s Balance Sheet. Write down the balances shown for the firm’s inventories, accounts receivable, and accounts payable.
3. Using the information from parts a and b, calculate its inventory turnover, accounts receivable turnover, and accounts payable turnover. You should show your work!
4. Calculate production cycle (also called Days of Sales in Inventory), collection cycle (also called Number of Days of Credit or Days of Sales Outstanding), and accounts payable cycle (also called Days of Payable Outstanding). You should show your work!
5. What is the company’s cash conversion cycle? You should show your work! Please note that there is a typo in the textbook. The correct formual is
CCC = DSI + DSO – DPO
6. Discuss the results that you receive in one paragraph. Should the company decrease cash conversion cycle? Please explain your answer.
7. In your responses to other students compare the cash conversion cycles of your company with the cash conversion cycle in another student’s posting. What factors are responsible for these differences? Are these differences firm specific or are they consequences of the nature of the businesses in which these firms operate? Please explain your answers.
We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.Read more
The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.Read more
The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.Read more
By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.Read more