The characteristics of the firm having long operating cycle. Operating Cycle: Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

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Answer 1

Question

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

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Scenario one: Under what circumstances would it be appropriate for a firm to use different cost of capital for its different operating divisions? If the overall firm WACC was used as the hurdle rate for all divisions, would the riskier division or the more conservative divisions tend to get most of the investment projects? Why? If you were to try to estimate the appropriate cost of capital for different divisions, what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division’s cost of capital?

Scenario three: If a portfolio has a positive investment in every asset, can the expected return on a portfolio be greater than that of every asset in the portfolio? Can it be less than that of every asset in the portfolio? If you answer yes to one of both of these questions, explain and give an example for your answer(s). Please Provide a Reference

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Answer 2

Question

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

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Answer 3

Question

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

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Answer 4

Question

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

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Answer 5

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

Answer 6

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

Answer 7

Chapter 26, Problem 1CQ

Summary Introduction

To explain: The characteristics of the firm having long operating cycle.

Operating Cycle:

Operating cycle is a time period between the sale of a product and the recovery of cash from the customer. Operating cycle is also known as the business cycle, it involves every quantitative business activity of the company.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQ

The following are the characteristics of the firm having long operating cycle.

Store more inventory
Pay supplier dues quickly.
Accounts receivables are high.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

The firm having long operating cycle always maintains a high storage of inventory. By keeping high storage of inventory the inventory turnover of such companies are very low.
These companies pay cash to accounts payable quickly. As they maintain high storage of inventory, so they are able to sell product to customer every time and this is the reason they easily pay cash to suppliers.
These companies believe to sell products on credit basis; by this strategy, they have more customer retention and loyalty. As by selling of product on credit basis the accounts receivable account automatically increases the long operating cycle of the company.

Answer 12

Conclusion

Thus, the long operating cycle companies are making a strong planning on the working capital components.

Answer 13

Ch. 26 - Prob. 1CQ Ch. 26 - Prob. 2CQ Ch. 26 - Prob. 3CQ Ch. 26 - Cost of Current Assets Grohl Manufacturing, Inc.,...Ch. 26 - Prob. 5CQ Ch. 26 - Shortage Costs What are the costs of shortages?...Ch. 26 - Prob. 7CQ Ch. 26 - Prob. 8CQ Ch. 26 - Prob. 9CQ Ch. 26 - Prob. 10CQ

Answer to Problem 1CQ

Explanation of Solution

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