Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 16, Problem 2CTCR
Summary Introduction

To discuss: The characteristics of the firm with a long cash cycle.

Introduction:

The time between the cash disbursement and cash collection is termed as cash cycle. The formula to calculate the cash cycle is as follows:

Cash cycle=Operating cycleAccounting cycle

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Is it possible for a firm’s cash cycle to be longer than its operating cycle?Explain why or why not.
What should a firm’s goal be regarding the cash conversion cycle,holding other things constant? Explain your answer.
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Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)

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