Improving the Working Capital Cycle for SMEs in the UK

1991 WordsJan 28, 20188 Pages
I. INTRODUCTION According to recent report from Bolshaw L. (2013), there were more than 500 UK SMEs failed in operation due to financial problems. From this research, people can see the importance of finance and accounting in nowadays business world (Vitez O, 2014). In this report, the paper will be divided into two parts, which aims to answer two following questions. In order to answer the first question, this paper will discuss how each part of the working capital cycle could be improved and evaluated the implications of the improvements on XYZ and other connected parties in terms of trade receivables and trade payables. In addition, to answer the second question, this paper will formally show the evaluation and discussion of the relevant costs, income and qualitative factors to allow the SMA to reach their goal and decision-making. Moreover, the skills in key areas; roles and limitations of management accounting theories are analyzed critically based on given information. PART 1 1. How each part of the working capital cycle could be improved The working capital cycle (WCC) is the amount of time it takes to turn the net current assets and current liabilities into cash. The working capital cycle monitors the movement of the cycle can help a company improve its working capital position. Working capital is a highly effective barometer of a company’s operational and financial efficiency and effectiveness. The better its condition, the better positioned a company is to

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