Describe what would happen to a company if it ran out of cash. Explain the importance of good working capital management and the cash conversion cycle
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- What is the Objective: Useful Information about Net Cash Inflows to the Company, and why is it important?What would happen to a company if it ran out of cash?Explain the importance of good working capital management and the cash conversion cycleExplain why cash management is critical for young, fast growing companies and describe how a company could seek to cover any cash shortfalls in the future.
- What are some tools that companies have to manage their (net operating) working capital? Provide examples of inventory and receivables management techniques. What is the Cash Conversion Cycle and why is this a useful metric? Are there risks if this is too low?If you were the financial manager of Stars and StripesClothing, what would you do with the excess cash thatthe firm expects in the second and fourth quarters? (Discuss the factors that are likely to influence the desired level of cash of a company
- When it comes to working capital, there are several things to manage. From the cash conversion cycle to the floats for disbursements and collections to the age of your accounts receivable and cash discounts on both your AR and AP; it’s all about the cash. What are the factors in a business that are going to make turning an item into cash quickly critical, and are there factors that make turning your capital into cash quickly less important?You are a manager in a company and have been noticing that the Cash Conversion Cycle is a problem. One of the following tools could help you manage it: a. The financial leverage ratiosb. The total asset turnover ratio c. The ABC system d. The free cash flow formula e. All of the above f. None of the aboveHow can you tell by looking at a company's Statement of Cash Flows if the company is borrowing more money or paying back more debt?
- Your CFO tells you as finance manager that he feels much safer to have a larger inventory and cash level than before. What are trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for cash level separatelyWhat does a positive operating cash flow mean for a company? What do a positive cash flow from assets, a positive cash flow to creditors and a positive cash flow to stockholders mean? What do these positive cash flows mean for an expansion plan financed by debt and equity?How does the return on invested capital (ROIC) affect a company's cash flow? What are the relationship between ROIC, growth, and cash flow. Please provide references.