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Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?
Why is the normal operating cycle for a merchandising company likely to be longer than for a service company?
What is the difference between long-term and short-term investments?
From an accounting perspective, short-term investments have a life cycle of less than 12 months; long term investments have a life cycle of 12 months or longer.
What are the Characteristics of a firm with long operating cycle?
A firm with a long operating cycle typically has extended periods between the acquisition of inventory and the collection of receivables. This often occurs in industries such as manufacturing or construction, where production time and project completion can be lengthy. Such firms may require significant working capital to sustain operations during this extended cycle, and they often face higher risks related to cash flow management. Additionally, they may rely on strong supplier and customer relationships to manage inventory and receivables effectively.
How is the cash conversion cycle calculated and what factors are involved in determining its value?
The cash conversion cycle is calculated by adding the days inventory outstanding (DIO) to the days sales outstanding (DSO) and then subtracting the days payables outstanding (DPO). Factors involved in determining its value include how quickly a company can sell its inventory, how long it takes to collect payments from customers, and how long it takes to pay suppliers. A shorter cash conversion cycle indicates better efficiency in managing cash flow.
Difference between cycle stock and safety stock?
Cycle stock and safety stock are both goods a company holds to supply to customers but the cycle stock is used for immediate orders while the safety stock is held to meet the fluctuations in demand. The two kinds of stock are usually stored in separate areas of a business.
Cash operating cycle?
The cash conversion cycle (Operating Cycle) is the length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable. It is the time required for a business to turn purchases into cash receipts from custome.
What is the difference between Days Working Capital and Cash Conversion Cycle?
There is no difference : DWC=DSO+DIH-DPO --> CashConversionCycle
What are the different between an operating cycle and a cash conversion cycle?
Operating cycle is the period in which company purchase raw material and good manufactured from that raw material while cash cycle is investing cash in inventory to manufacture the goods and selling the goods and earning cash from that sales and after that collecting cash from debtors.
What is the difference between a cell cycle and a egg cycle?
the difference between a cell cycle and egg cycle is...
Difference between Carnot and ideal cycle?
What is the difference between ideal and actual cycle?
The basis for classifying assets as current or non-current is conversion to cash within?
operating cycle or one year, whichever's longer
Difference between gross operating cycle and net operating cycle?
Operating CycleAn operating time cycle is the average time period between the acquisition of inventory and the receipt of cash from the inventory's sale. A short operating cycle means a more prompt return on investment for the firm's inventory. During an economic downtown, an operating cycle typically lasts longer than in periods of economic growth. Cash Conversion CycleThe cash conversion cycle is the number of days required for a company to convert resources to cash flows. This measure calculates the time period during which each input dollar is committed to production and sales processes before it is converted to cash through the accounts receivable process. The cash conversion process gives insight into the financial stability of a company because it reflects the time period during which assets are committed to business processes and therefore are not available to invest to achieve even greater returns. As a result, the shorter the cash conversion cycle, the better. Calculating the Operating CycleTo calculate the operating cycle, determine the duration of each element of the operating cycle including raw materials, work-in-process, finished goods and bills receivable. Next, calculate the aggregate duration of the cycle by adding together each of these elements. The greater the operating cycle, the greater the business requirement for working capital. The greater the working-capital requirement, the higher the inventory-carrying cost, including interest payments, and the greater the opportunity cost due to the inability to invest funds in a higher use. In addition, the lower the operating cycle, the greater the number of completed cycles per year, and the greater the annual gross and net profits. Caculating the Cash ConversionThe cash conversion cycle calculation uses elements of the operating cycle equation, including raw materials, work-in-process, finished goods and bills receivable, in addition to the days' payables outstanding. The days' payables outstanding is the average time required by the company to pay its vendors. First, calculate the accounts payable turnover by dividing the cost of goods sold by accounts payable. Next, divide 365 days by the accounts payable turnover to determine the days' payables outstanding. To determine the cash conversion cycle, first add the days' sales outstanding and the days' sales in inventory, and then subtract the days' payables outstanding. The resulting cash conversion cycle measures the time period between the cash outflow for materials required for the production of a product or service and the cash inflow from sales. A decrease in the cash conversion cycle can lead to an increase in the operating profit margin.
What are the difference between information processing cycle and information cycle?
"Data processing is simply the conversion of raw data into meaningful information through a process."& Data Processing Cycle is described by following imageImage source: jhigh.co.uk
What is the difference between reptile breeding cycle and the emperor penguin breeding cycle?
heheheh
What is the typical time difference between ovulation and menstruation in the menstrual cycle?
The typical time difference between ovulation and menstruation in the menstrual cycle is around 14 days.
What is the difference between instruction cycle and machine cycle?
an instruction cycle may consist of a number of machine cycles.
Is there a difference between reg 2 cycle oil and mantis 2 cycle oil?
bbm
