Business Finance
CU Cash Conversion Cycle Cash Budget Inventory Management & Credit Policies Discussion

Cumberland University

Question Description

I need support with this Management question so I can learn better.


Cash Budget

Close to 50% of the typical industrial and retail firm's assets are held as working capital. Many newly minted college graduates work in positions that focus on working capital management, particularly in small businesses in which most new jobs are created in today's economy.

To prepare for this Discussion: Shared Practice, select two of the following components of working capital management: the cash conversion cycle, the cash budget, inventory management, and credit policies. Think about scenarios in which your selected topics were important for informing decision making. Be sure to review the video links above and conduct additional research using academically reviewed materials, and your professional experience on working capital concepts to help develop your scenarios. Support your discussion with appropriate examples including numerical examples as necessary.

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Final Answer

Attached.

Running head: DISCUSSION 7 CASH BUDGET

Discussion 7: Cash Budget
Name
Institutional Affiliation
Date

1

DISCUSSION 7 CASH BUDGET

2

Discussion 7: Cash Budget
Cash conversion cycle
One of the ways through which the management can ensure that its business is generating
positive cash flow is the implementation of a cash conversion cycle (CCC). According to
Harnish (2014), the cash conversion cycle is a performance metric that determines how long it
takes for a dollar that a company spends on anything (including rent, marketing, payroll, utilities,
etc.) to move through the business process and back to the firm’s pocket. A shorter CCC is good
for a company because it is an indication that the firm can rapidly purchase, sell, as well as
receive cash from customers. The objective of companies that employ this method is to get
money in the bank before they need to spend it i.e., to generate negative CCC (Harnish, 2014).
The cash conversion cycle comprises three primary elements, namely the days of
inventory outstanding, days of sales outstanding, and days o...

University of Maryland

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