Answered: What are the factors in a business that…

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?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1cM

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Question

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?

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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