The text identifies three principal components that jointly comprise the cash conversion cycle. The cash conversion cycle is defined as the average length of time a dollar is tied up in current assets, and it is determined by the interaction between the production cycle (also called Days of Sales in Inventory), receivables collection period (also called Number of Days of Credit, Collection cycle, or Days of Sales Outstanding), and the accounts payable cycle (also called Days of Payable Outstanding). Ideally, a company wants to minimize the cash conversion cycle as much as possible. In some circumstances, a firm has a comparative advantage in working capital management because of the nature of its business. We will look at the cash conversion cycles of companies and their implications.
In your initial response to the topic you have to answer all 6 questions.
You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.
CCC = DSI + DSO – DPO
****If you had a budget deficit, what could you do about it? What would be the best solution for the long term? If you had a budget surplus, what could you do about it? What would be your best choice, and why
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