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How does a short-term cash flow crisis impact a firm's competitive strategy?
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- What does a negative value for unlevered free cash flow imply for the claimants of a firm?- How would a reduction in the cash conversion cycle increase profitability? What aresome actions a firm can take to shorten its cash conversion cycle?- Is it possible for a firm’s cash conversion cycle to be negative (or net operating workingcapital to be negative)? Explain why or why not. If there exists a firm with negativeCCC, give an example, what are characteristics of such company.why is knowledge of the money market important for carrying out value maximizing working capital short term management?why are opportunity cost of not taking account the risk return trade off of the various short term instruments?
- When do liquidity management solutions deliver maximum value to the firm? Subject: Treasury ManagementWhat 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?Practice : a: The computation of return on average investment ignores one characteristic of the earnings stream, which is considered in discounting cash flows. What is this characteristic? Why is it important? b: What are the disadvantages of evaluating an investment using payback period? Why might a company use this methodology despite these disadvantages?
- how can businesses effectively manage their liquidity and profitability through understanding concepts such as current liabilities, operating cycle, and cash conversion cycle in the context of short-term decision-making?How can an analyst approach forecasting a company’s future net income and cash fl ow?What is the relationship between the predictability fo a firm's cash inflows and its required level of net working capital? How are net working capital, liquify and risk of insolvency related?
- What would happen to a company if it ran out of cash?Explain the importance of good working capital management and the cash conversion cycleWhat are the advantages/disadvantages of using the discounted cash flows method of estimating the value of a company?What contrasts are there between what is shown in cash flow statements and the need for firms to borrow at high rates and firms' income statements?