Optimize Working Capital with Proven Strategies

Working Capital Management
Strategies for Improving Working Capital Management by Dorothy Rule, Director and Global Head of Liquidity and Investments, Citigroup Global
Transaction Services n 2004, treasurers worldwide continue to strive to manage working capital more efficiently. They are under pressure to reduce
Days Sales Outstanding, to measure Days Payable Outstanding, and to find alternatives for enhancing yield management due to record low interest
rates. Other factors are impacting corporate treasurers as well. Corporate governance initiatives such as SarbanesOxley are increasing the treasurer's
need for access and visibility to accounts around the world. The continuous rollout of Enterprise Resource Planning (ERP) systems ... Show more
content on Helpwriting.net ...
The liquidity opportunity
In liquidity management, corporations have for many years concentrated and notionally pooled cash balances domestically to maximise returns on
balances and minimise expense. Globalisation and the euro prompted an increase in cross–border concentration. Now, treasurers can leverage target
balancing, notional pooling and automated investment products to benefit from a streamlined, electronic global solution. These global liquidity
management
TMI | Working Capital Management
16
Concentrating funds worldwide Motorola won the 2003 Alexander Hamilton Award from Treasury and Risk Management for developing an innovative
liquidity structure. Citigroup worked with Motorola to create a structure that automatically moves funds from various
Asian subsidiaries funding each other and global treasury A global corporation had excess liquidity in multiple markets in Asia, predominantly in local
currencies. It wanted to utilise liquidity in one market to fund an entity in another market. It also wanted to move excess liquidity efficiently out of the
region to its global treasury, which was borrowing money from the market. All of its flows were in local currencies and some were in the more
regulated markets like Korea and Malaysia. The client was not banking only with Citibank, but with other banks as well and did not want to change
banking relationships. Citigroup set up a cash management arrangement that enabled the client to upstream its local

... Get more on HelpWriting.net ...

Working Capital Management Project
Working capital management
Abstract
The Project Report is a summary of Study of some of the elements of Working Capital Management at the Heavy Engineering Division of Larsen
& Toubro Limited (L&T, HED). The various aspects of these working capital elements have been studied. The Study of working capital
management involved understanding of receivables, payables and to an extent inventory management. After a brief introduction to the nature of
Business activity of Larsen & Toubro and its Business Division– Heavy Engineering Division, the report comprises a detailed comparison of
Heavy Engineering Division's performance with its Indian and Foreign Competitors. The comparison is based on profitability, productivity and working
... Show more content on Helpwriting.net ...
It is not possible to get divisional reports of organizations such as BHEL, Godrej & Boyce etc. This makes the ratio analysis somewhat
inaccurate. However, it is a good indication of the performance of the company.
About Larsen & Toubro Limited
Larsen & Toubro Limited (L&T) is a technology–driven Engineering and Construction organization and one of the largest companies in
India's private sector. It has additional interests in Information Technology and Services. L&T was founded by two Danish engineers, Henning
Holck–Larsen and Soren Kristian Toubro, in 1938. Beginning with the import of machinery from Europe, L&T rapidly took on engineering and
construction assignments of increasing sophistication. It now has a major presence in key sectors of the economy. A strong, customer–focused
approach and the constant quest for top–class quality has enabled the Company to attain and sustain leadership in its major lines of business across
seven decades. With factories and offices located around the country, further supplemented by a comprehensive marketing and distribution network,
L&T enjoys an image and equity in virtually every district of India.
With revenues to the tune of more than Rs. 18,000 crores reported for the financial year ending March 2007 and employee strength of over 20,000,
Larsen &

EFFECT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY OF FIRMS IN MALAYSIA
( M. A., Zariyawati a, M. N., Annuar b and A.S., Abdul Rahim c a ,b & c Univeristi Putra Malaysia, Malaysia.
ABSTRACT Working capital management is important part in firm financial management decision. An optimal working capital management is
expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off
between profitability and liquidity accurately. The purpose of this study is to investigate the relationship between working capital management and
firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data ... Show more content on
Helpwriting.net ...
Working capital management and its effects on profitability is focused in this study. Specific objectives are to examine a relationship between working
capital management and profitability over a 11 years period, to establish a relationship between the two objectives of liquidity and profitability of the
firms and to investigate the relationship between debt used by the a firm and its profitability
Most previous study focus on develop market (Peel & Wilson, 1996; Shin & Soenon, 1998 and Deloof, 2003). Thus investigating this issue could
provide additional insights and perhaps different evidence on the working capital management in emerging capital market. This will surely enrich the
finance literature on this issue. Additionally, the results of this study would provide firm managers better insights on how to create efficient working
capital management that have ability to maximize firm's value. As a result, it will build up confidence in investor to invest in that firm. Further, the
confidence of investors to invest in Malaysia will influence the growth of economic. The results of this study would also assist policy–makers to
implement new sets of policies regarding the working capital market in Malaysia to ensure continuous economic growth.
LITERATURE REVIEW
In intention to discover the relationship between efficient working capital management and firm's profitability(Shin & Soenen, 1998) used net–trade
cycle (NTC) as a measure of working capital

Trends Analysis in Working Capital Management
Trends Analysis in Working Capital Management
Abstract
The following pages focus on presenting efficiency of the working capital management of several companies in sectors like automotive, engineering,
foods and beverages, personal care products, oil and gas, pharmaceuticals, textiles, and electronics. The Introduction presents the points of view used in
this paper. The Literature Review sections details some of the most important issues on working capital management. The Research Methodology
section describes the methods used in this case, which refer to using secondary sources like statistics, annual reports, and several books. The Analysis
of Findings section discusses the information of this research. The Conclusions section presents some of the most interesting issues addressed by the
paper.
Introduction
The competitive business environment in which companies develop their activity determines them to focus on strategies intended to improve their
performance. This is because their performance on the market can be attributed to creating competitive advantage. This objective can be reached with
different strategies, some of them based on reducing costs, others based on differentiation of companies' products and services. However, these
strategies are affected by working capital of these companies. It is important to analyze how these companies manage their working capital in order to
improve their performance.
The most important objective that these companies must

Financial Accounts of Lawrence Sports: A Simulation
Lawrence Sports Simulation Lawrence Sports are facing a challenge; they have a single buyer for their goods and deal with two main suppliers.
The firm is facing delays in collecting the accounts receivable from the buyer; Mayo, while the payments for the suppliers; Garner Products and
Murray Leather Works remain due. The strategy suggested is to readjust the credit terms with Lawrence and the suppliers to reduce the pressure o
the cash flow and decrease the requirement for borrowing. The strategy requires the balancing of the different stakeholders needs in order to retain
the good business relationships. The strategy of tightening the credit policy is to be accompanied by the use of the balanced scorecard which will
help the firm focus on the overall performance and Cash Conversion Cycle The cash conversion cycle measures the time between a firm spending
cash and collect cash from the sales. The longer the time period the greater the potential need for working capital to support the firm. Generally,
lower cash conversion cycle times are seen as favorable. The cash conversion cycle starts with Lawrence Sports purchasing the inputs for the goods
they make from Garner Products and Murray Leather Works. The purchases will be on credit, and payment will be due at a point in the future. The
goods are then made and shipped to Mayo, the payments to Garner Products and Murray Leather Works are due before the payments are received from
Mayo, with Mayo creating further delays.

A Report On Capital Goods Industry
1–Introduction:
1–1–Background:
Capital goods industry is consisting of products that have value for particular industries like mining, energy, infrastructure or constructions in large
scale. They can directly improve the production process and create additional revenue through additional commercialisation and application in further
industrial sectors. As a result of considerable market expanding, the capital goods sector is including suppliers varying in size and scope. In fact,
they all play a crucial role in the production process of any firm or industrial activity. However, the development of the capital goods sector and the
dynamism of the suppliers depend mainly on domestic demand factors such as the price of capital goods, price ... Show more content on Helpwriting.net
...
On the other hand, REL – established in 2001– specialises in the supply of complete pumping and dewatering systems, power generation, air
compressors and associated equipment to the following industry sectors: Mining, Oil & Gas, Heavy Engineering and Infrastructure. As a publicly
listed Australian company (ASX: RQL, with an annual revenue of $ 87.9 Million, employing around 293 employee has resources, both financial and
technical, and the required equipment and personnel to carry out projects of any scale and complexity. REL has delivered successful outcomes on a
diverse range of Australian and International projects (REL 2014).
Financial analysts usually have viewed the liquidity ratios like current ratio and quick ratio as key indicators of a firm 's liquidity performance. But,
they fail to distinguish that the fundamental liquidity protection against unanticipated discrepancies in the amount and timing of operating cash
inflows and outflows is provided by a firm 's cash reserve investments in conjunction with its unused borrowing capacity rather than by total current
asset coverage of outstanding current liabilities. A concentration of current assets in the fewer liquid receivables andinventory forms possibly will
generate an increasing current ratio reflecting a worsening capability by the firm to cover its current liabilities rather than an enhanced liquidity
position for the firm (Richards & Laughlin,1980). Ruback (2003) in his study showed that Dell and

Effects of Working Capital Management on Small and Medium...
The current issue and full text archive of this journal is available at www.emeraldinsight.com/1743–9132.htm IJMF 3,2 Effects of working capital
management on SME proп¬Ѓtability Вґ Вґ Pedro Juan GarcД±a–Teruel and Pedro MartД±nez–Solano Deptartment of Management and Finance,
Faculty of Economy and Business, University of Murcia, Murcia, Spain Abstract Purpose – The object of the research presented in this paper is to
provide empirical evidence on the effects of working capital management on the proп¬Ѓtability of a sample of small and medium–sized Spanish
п¬Ѓrms. Design/methodology/approach – The authors have collected a panel of 8,872 small to medium–sized enterprises (SMEs) covering the period
1996–2002. The authors tested the effects of working... Show more content on Helpwriting.net ...
Most of these companies' assets are in the form of current assets. Also, current liabilities are one of their main sources of external п¬Ѓnance because
they encounter difп¬Ѓculties in obtaining funding in the long–term capital markets (Petersen and Rajan, 1997) and the п¬Ѓnancing constraints that
they face (Whited, 1992; Fazzari and Petersen, 1993). In this respect, Elliehausen and Wolken (1993), Petersen and Rajan (1997) and Danielson and
Scott (2000) show that small and medium–sized US п¬Ѓrms use vendor п¬Ѓnancing when they have run out of debt. Thus, efп¬Ѓcient working capital
management is particularly important for smaller companies (Peel and Wilson, 1996). In this context, the objective of the current work is to provide
empirical evidence about the effects of working capital management on proп¬Ѓtability for a panel made up of 8,872 small to medium–sized enterprises
(SMEs) during the period 1996 to 2002. This work contributes to the literature in two ways. First, no such evidence exists for the case of SMEs in
earlier studies. A sample of Spanish SMEs was studied that operate within the so–called continental model, which is characterized by its less developed
capital markets (La Porta et al., 1997), and by the fact that most resources are channeled through п¬Ѓnancial intermediaries Вґ (Pampillon, 2000). All
this suggests that Spanish SMEs have fewer alternative sources of external п¬Ѓnance available,

Finance Assignment
1
Question 1 (16 points) Carol Inc is considering the following three prices to charge customers for each of the candy packets they produce: i) $2.20 ii)
$2.00 iii) $1.70 The relevant data for decision–making is below: Fixed Costs = $1200 Variable Costs = $0.50 per unit Calculate the following: a) The
Breakeven Point for each price level b) Using price of $2.20 what would be the new breakeven point if (1) fixed costs decreased to $1000 all else
remaining the same, (2) Variable costs increased to $0.75 all else remaining the same. Draw a graph to represent scenario (1) and (2) comparing with
the original data for price of $2.20. [Total of two graphs] Question 2 (12 points) Greater Manufacturing is evaluating two different operating ... Show
more content on Helpwriting.net ...
Calculate the dollar discount that the company will have to give Penelope Production Plant to result in a net benefit to the company.
4
Question 8 (6 points) Hubbards is analyzing the performance of its cash management. On average, the firm holds inventory 65 days, pays its suppliers
in 35 days, and collects its receivables in 15 days. The firm has a current annual outlay of $1,960,000 on operating cycle investments. Hubbards
currently pays 10 percent for its negotiated financing. (Assume a 360 day year.) (a) Calculate the firm's cash conversion cycle. (b) Calculate the firm's
operating cycle. (c) Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days. Question 9 (14 points)
Table 15.2
The company earns 5 percent on current assets and 15 percent on fixed assets. The firm's current liabilities cost 7 percent to maintain and the average
annual cost of long–term funds is 20 percent. a) The firm's initial net working capital is ________. [Numerical Answer] b) The firm's initial annual
profits on total assets are ________. [Numerical Answer] c) If the firm was to shift $3,000 of current assets to fixed assets, the firm's net working
capital would ________, the annual profits on total assets would ________, and the risk of technical insolvency would ________, respectively.
[Choose either the word increase or decrease for each blank] d) If the firm was to shift $7,000 of fixed assets to current assets, the

Home Depot Mission Statement
The Home Depot was co–founded in 1978 by Bernard Marcus, Arthur Blank, and Pat Farrah. It is considered as the world's largest home
improvement specialty retailer. As of January 2017, there are 2,278 stores including the commonwealth of Puerto Rico and the territories of the United
States, Virgin Islands and Guam, Canada, and Mexico. There are more than 400,000 associates working for The Home Depot. The Home Depot sells a
wide assortment of building material, home improvement products, and lawn and garden products and they also provide many services. The mission
statement of the company says the following, "The Home Depot is in the home improvement business and our goal is to provide the highest level of
service, the broadest selection of products and the most competitive prices." The vision statement is slightly shorter than the mission statement, it says
that The Home Depot will provide, "one–stop shopping for the do–it–yourselfer." The values of the company match the mission statement as well as
the vision statement. The values of the company are as follows: creating shareholder value, entrepreneurial spirit, taking care of our people, respect
for all people, doing the right thing, building strong relationships, giving back, and excellent customer service. The Home Depot has adapted its
strategic framework. They refer it to as the three legs of the stool. The first leg stands for what The Home Depot is most passionate about and that is
the customers experience. The

Dell Case Study Dell Inventory Management
The case:
Dell systems started off as a producer and seller of high performance personal computers. It was a direct seller who pioneered using a telephone hotline
to sell products to its customers directly
Dell's inventory management:
Its production cycle began production of a computer after it received an order. This was a significant departure of strategy from the competitior's
strategy .
It maintained an inventory of components which it ordered on sales forecasts. This helped in keeping the price of inventory down and also being up to
date with the technology
Inventory costs are of different types:
'holding cost of inventory management' which includes both the capital cost of money tied in inventory and the physical cost of holing ... Show more
For 48 days the money was stuck in the cycle which made cash flow constrained. With better inventory management and change in focus to liquidity
rather than exclusively growth and coming back to direct selling they reduced their CCC by almost a week.
Now also lloking a the balance sheet the current ratio
YearCurrent Ratio
19962.08
19951.95
19941.94
The current ratio of the company has also remained consistent over the three years since it changed its focus. The current ratio is at an ideal around 2.
A good current ratio states that the company can meet its short term liabilities with its short term assets.This is a good indicatior of efficiency of Dell's
operating cycle that is its ability to turn product into

Riordan Manufacturing вЂ“ Accounting Cycle Description Essay
Riordan Manufacturing – Accounting Cycle Description Introduction Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection
molding. Using cutting edge art design capabilities, this Fortune 1000 Enterprise Company maintains facilities in San Jose, California, Albany, Georgia,
Pontiac, Michigan and Hangzhou, China, and has annual earnings of $46 million. A company does not attain and maintain this type of success by
accident. Part of Riordan's success is due to its conversion accounting cycle. This paper will initially identify the five accounting cycles and explain
how Riordan uses the conversion accounting cycle. Next, the strengths and weaknesses of the internal controls related to the conversion cycle... Show
Next, the fixed asset cycle assists in verifying a businesses long–term growth by monitoring fixed assets acquisitions, depreciation, and disposals of
fixed assets. Lastly, the conversion cycle involves converting labor and raw materials into finished goods as well as the implementation of the cost
accounting function. The data provided from these five cycles give management important information to assist in the decision–making process. The
Conversion Cycle The conversion cycle, which is often called the production cycle, is used in a variety of ways at Riordan Manufacturing. "The
goal of a production cycle is to convert raw materials into finished goods as efficiently as possible" (Bagranoff, Simkin & Strand, 2008, p. 147). The
conversion cycle is initiated when raw materials are ordered. To assist in tracking materials ordered and arrival times, Riordan uses a scheduled orders
receiving report, which is submitted weekly. Additionally, a raw materials usage form is used to determine the quantity of subassemblies and final
products completed daily. Furthermore, the sales department completes orders and enters them into the customer shipping and billing system. Next
orders are tracked from the time they are shipped until final destination arrival. The inventory system is updated daily. At year end a physical inventory
is conducted to compare discrepancies. The cycle is complete when the finished goods are transferred to

Swot Analysis Of Fuji Restaurant
Fuji Restaurant Fuji Japanese Restaurants: The Company dominates the Thai Japanese restaurant market with delicious, nutritious Japanese food. All
items are reasonably priced and certain to please Thai taste. Today Fuji Group owns and operates one of Thailand's largest health restaurant chains
with 90 branches across the country. OISHI GROUP PUBLIC COMPANY LIMITED Business operation of OISHI Group has divided into two
divisions; the first one is food business which consist of 9 Japanese restaurant brands with 193 stores such as Oishi Grand – An outstanding and
luxurious buffet environment with a limited time of 3 hours at the price per head of Baht 749, Oishi Buffet – Japanese food buffet style with a limited
time of 1 hour and 45 minutes at the price per head of Baht 519, Shabushi – Shabu buffet style with the ingredients served along a conveyor (kaiten)
together with assorted... Show more content on Helpwriting.net ...
Furthermore, it is just coming into the growth stage of business with the highest branch in the Japanese restaurant segment. It has high growth potential
on business expansion plan all over countries. Uptrend on private consumption expenditure &" Eating outside" lifestyle After Thailand passed through
economic downturn from political unrest and world economic pressure which force GDP and consumption index to decrease since the second half of
year 2013. So, same store sale growth ("SSSG") of MK & Yayoi has positive relationship with Private consumption index and GDP. Currently, it start to
turn up to positive sign which people confidence to spend more and its pick up point of business in the near future. Furthermore, Thai people tend to eat
outside more than before which you can see from increasing in number of restaurant and expenditure. Business growth opportunity by branch expansion
and M&A

Van Den Borsh Corp
Problems – Chapter 16 1. Your consulting firm was recently hired to improve the performance of Shin–Soenen Inc, which is highly profitable but has
been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle.
Using the following information and a 365–day year, what is the firm's present cash conversion cycle?
Average inventory =$75,000
Annual sales =$600,000
Annual cost of goods sold =$360,000
Average accounts receivable =$160,000
Average accounts payable =$25,000
Cash Conversion Cycle:
Inventory conversion period (ICP) = Average inventory / Cost of goods sold per day =... Show more content on Helpwriting.net ...
What will be the net change in the cash conversion cycle, assuming a 365–day year?
Input data:
Annual sales = $50,735,000
Average inventory = $15,012,000
Average accounts receivable = $10,008,000
Cost of goods sold = 85% of $50,735,000 = $43,124,750
Average accounts payable = (43,124,750/365) * 30 = $3,544,500
Cash Conversion Cycle:
Inventory conversion period (ICP) = Average inventory / Cost of goods sold per day = 15,012,000 / (43,124,750/365) = 127.06 days
Receivable conversion period (RCP) = Average accounts receivable / Sales per day = 10,008,000 / (50,735,000/365) = 72 days
Payables deferral period (PDP) = Average accounts payable / Cost of goods sold per day = 3,544,500 / (43,124,750/365) = 30 days
Cash Conversion Cycle (CCC) = ICP + RCP – PDP = 127.06 + 72 – 30 days = 169.06 days

New input data:
Annual sales = $50,735,000
Average inventory = $15,012,000 – 1,946,000 =

Impact of Working Capital Management on Profitibility of...
EFFECT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY OF FIRMS– A study on the Indian Oil Drilling & Exploration industrY
[1]Dr. Anupam Jain ABSTRACT Efficient management of working Capital is one of the pre
–conditions for the success of an enterprise. Efficient
management of working capital means management of various components of working capital in such a way that an adequate amount of working
capital is maintained for smooth running of a firm. An optimal working capital management is expected to contribute positively to the creation of firm
value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The
purpose of this study is to investigate the... Show more content on Helpwriting.net ...
For measuring the efficiency of working capital management, performance, utilization, and overall efficiency indices were calculated instead of using
some common working capital management ratios. Setting industry norms as target–efficiency levels of the individual firms, this paper also tested the
speed of achieving that target level of efficiency by an individual firm during the period of study. Findings of the study indicated that the Indian
Cement Industry as a whole did not perform remarkably well during this period. Dr. D. Mukhopadhyay conducted a research study to examine working
capital management practices and the problems faced by the firms in working capital management process particularly in heavy engineering industries.
A sick engineering firm named "M/S Heavy Engineering Company Limited" had been selected and data from 1993–94 to 2002–03 had been analyzed.
He reported that, the company has under its possession huge real estate including land and the firm holds legacy of culture and heritage of more than
two hundred years of existence in industrial map of the country and as a consequence, it has built up "Goodwill" to a remarkable extent. Thus the
company may make revaluation of real estate including land and other assets and make valuation of goodwill and disposal of

Scandi Home Furnishings Essay
A. 2006–2007 Current Ratio = Current Assets/Current Liabilities =(1,500,000/2) / (600,000/2) = 2.5 Quick Ratio = (CA – Inventories)/CL
=(1,500,000/2)–(950,000)/2)/(600,000)/2) = 0.92 NWC to Total Assets Ratio = (CA– CL)/Assets =(1,500,000/2)–(600,000)/2)/(2,200,000/2) = 40.9%
2007–2008 Current Ratio = Current Assets/Current Liabilities =(1,770,000/2) / (774,000)/2) = 2.29 Quick Ratio = (CA – Inventories)/CL =(1,770,000
/2)–(1,100,000/2))/(774,000)/2) = 0.87 NWC to Total Assets Ratio = (CA– CL)/Assets =(1,770,000/2)–(774,000/2)/(2,670,000/2) = 37.3% Liquidity is
strong in both years but liquidity does appear to be weak from year to year. B. Conversion Period Ratio2006–20072007–2008... Show more content on
Helpwriting.net ...
G. 20072008 7.60%0.33% 1.36 1.35 ROA Model10.36%0.45% 20072008 Net Profit margin7.60%0.33% Asset Turnover1.36 1.35 Equity
Multiplier2.44 2.82 ROE Model25.33%1.27% The increase in marketing and admin expenses from sales is causing the ratios to decrease. Both models
are showing the multipliers are steady but the returns from the net profit margin appear to be causing the ratios to decrease. H. During 2006–2008,
Scandi takes on average 0.5 days faster than the industry average to complete the sale–to –cash conversion. During 2006–2008, Scandi takes on
average 43 days shorter to complete the total cash conversion cycle. I. When comparing Scandi's net profit margin to the industry, it outperformed
during 2007 and was far below the average in 2008. The Sales to Assets ratio was constant when compared to the industry average. Scandi's Total–Debt
to Total–Assets ratio was 61% in 2007 and 68% in 2008, which were well below the industry during this time. The ROE will be much higher than the
industry standard due to the dependency on debt. The ROA will be higher

Essay On Venture Capital
Venture Capital is a private approach to collect funds and it forms like companies. Basically, Venture Capital invested in emerging small and medium
enterprises, especially emerging high–tech firms to undertake a high risk and looking forward to a higher rate of return. Therefore, I think meaning of
the existence of venture capital is that many small and medium unlisted companies through this way of to support the company and make their
company become listed. Furthermore, many companies are in the start–up stage and they lack principal, once they loan from bank, it means they must
undertake the risk of bank loans. Once poor management happened, the company exists the risk of bankruptcy. In brief, we defined owned capital is
equity... Show more content on Helpwriting.net ...
Vice versa, if it is overpriced, it overdraft optimistic expectations of the market, reducing the investors for the future development of the company's
imagination, is not conducive to stock prices continue to rise steadily. Net working capital refers to the net current assets of a company which is
the flow of Funds. The importance of net working capital is that it is an important indicator of the ability of a company to repay the debt. The cash
source is obtained by means of investment, or loans, etc. uses of cash is to refer to how to allocate. A simple example of a person who deposits $
1,000 to a bank, if at 2% interest, then he will have 20 years the interest of the dollar, then the interest of 20 dollars is earned by bank investment is the
source of money, and this 1000 dollars to choose the investment bank, that is, the use of money. operating cycle refers to the period from the
purchase of raw materials for processing to the realization of cash or cash equivalents. Basically, a normal operating cycle is usually shorter than a
year and has several business cycles in a year.
The cash cycle refers to the time which a company needs to pay to receive. Otherwise, changes in cash cycle will affect the amount of working capital
required directly. In general, longer inventory turnover period and the accounts receivable turnover period with the shorter the turnover period payable
will cause the greater the

The Relationship Between Working Capital Management and...
International Research Journal of Finance and Economics ISSN 1450–2887 Issue 49 (2010) © EuroJournals Publishing, Inc. 2010 http:/
/www.eurojournals.com/finance.htm The Relationship between Working Capital Management and Profitability: A Vietnam Case Huynh Phuong Dong
Faculty of Accounting, Danang University of Economics, Vietnam E–mail: pdong2000@gmail.com Tel: +84989392392 Jyh–tay Su Assistant professor
at Southern Taiwan University, No.1 NanTai St Yong Kang City, Tainan County, Taiwan R.O.C E
–mail: rogersu@mail.stut.edu.tw Abstract The
working capital management plays an important role for success or failure of firm in business because of its effect on firm's profitability as well on
liquidity. The study is based on secondary data... Show more content on Helpwriting.net ...
The way of working capital management can have a significant impact on both the liquidity and profitability of the company (Shin and Soenen,
1998). The main purpose of any firm is maximum the profit. But, maintaining liquidity of the firm also is an important objective. The problem is that
increasing profits at the cost of liquidity can bring serious problems to the firm. Thus, strategy of firm must be a balance between these two objectives
of the firms. Because the importance of profit and liquidity are the same so, one objective should not be at cost of the other. If we ignore about profit,
we cannot survive for a longer period. Conversely, if we do not care about liquidity, we may face the problem of insolvency. For these reasons working
capital management should be given proper consideration and will ultimately affect the profitability of the firm. Working capital management involves
planning and controlling current assets and current liabilities in a manner that eliminates the risk of inability to meet due short term obligations on the
one hand and avoid excessive investment in these assets on the other hand( Eljelly,2004). Lamberson (1995) showed that working capital management
has become one of the most important issues in organization, where many financial managers are finding it difficult to identify the important drivers of
working capital and the optimum level of working capital. As a result, companies

FIN 512 WEEK 2 answer key Essay
FI 512 Week 2 Answer Key
Chapter 3
1. [Business Organization and Intellectual Property] Phil Young, founder of the Pedal Pushers Company, has developed several prototypes of a
pedal replacement for children's bicycles. The Pedal Pusher will replace existing bicycle pedals with an easy release stirrup to help smaller children
hold their feet on the pedals. The Pedal Pusher will glow in the dark and will provide a musical sound as the bicycle is pedaled. Phil plans to purchase
materials for making the product from others, assemble the products at the venture's facilities, and hire product sales representatives to sell the Pedal
Pushers through local retail and discount stores that sell children bicycles. Phil will need to ... Show more content on Helpwriting.net ...
Chapter 5
8. [Cash Conversion Cycle] Castillo Products Company, described in Problem 7, improved its operations from a net loss in 2009 to a net profit in 2010.
While the founders, Cindy and Rob Castillo, are happy about these developments, they are concerned with trying to understand how long the firm takes
to complete its cash conversion cycle in 2010. Use the financial statements from Problem 7 to make your calculations. Balance sheet items should
reflect the averages of the 2009 and 2010 accounts.
A. Calculate the inventory–to–sale conversion period for 2010.
Inventory–to–Sale Conversion Period = Avg. Inventory/Avg. Daily COGS = (($400,000 + $500,000)/2)/($900,000/365) = 182.50 days
B. Calculate the sale–to–cash conversion period for 2010.
Sale–to–Cash Conversion Period = Avg. Receivables/Avg. Daily Sales
= (($200,000 + $280,000)/2)/($1,500,000/365) = 58.40 days
A. Calculate the purchase–to–payment conversion period for 2010.

Purchase–to–Payment Conversion Period
= (Avg. Payables + Avg. Accruals)/Avg. Daily CGS = (($130,000 + $160,000)/2 + ($50,000 + $70,000)/2)/($900,000/365) = 83.14 days
B. Determine the length of the Castillo Product's cash conversion cycle for 2010.
Length of the Cash Conversion Cycle = (Inventory–to–Sale Conversion Period) + (Sales–to–cash Conversion Period) – (Purchase–to–Payment
Conversion Period)
= 182.50 days +

Scandi Home Furnishings Inc
Scandi Home Furnishings Case Kaj Rasmussen founded Scandi Home Furnishings as a corporation during mid–2007. Sales during the first full year
(2008) of operation reached $1.3 million. Sales increased by 15 percent in 2009 and another 20 percent in 2010. However, profits after increasing in
2009 over 2008 fell sharply in 2010 causing Kaj to wonder what was happening to his "pride and joy" business venture. After all, Kaj has continued to
work as close as possible to a 24/7 pace beginning with the startup of Scandi and through the first three full years of operation. Scandi Home
Furnishings, located in eastern North Carolina, designs, manufactures, and sells Scandinavian–designed furniture and accessories to home furnishings...
Show more content on Helpwriting.net ...
Balance Sheets 2008 20092010 Cash $50,000$40,000$10,000 Accounts Receivables 200,000 260,000 360,000 Inventories 450,000 500,000600,000
Total Current Assets 700,000 800,000 970,000 Fixed Assets, Net 300,000 400,000500,000 Total Assets $1,000,000 $1,200,000 $1,470,000 Accounts
Payable$130,000 $170,000 $180,000 Accruals 50,000 70,00080,000 Bank Loan 90,000 90,000184,000 Total Current Liabilities 270,000
330,000444,000 Long–Term Debt 300,000 400,000550,000 Common Stock ($10 par)* 300,000 300,000300,000 Capital Surplus 50,000 50,00050,000
Retained Earnings

Working Capital Simulation Managing Growth Case Study
Working Capital Simulation: Managing Growth
FIN/571
October 13, 2014
William Stokes
Working Capital Simulation: Managing Growth
The Corporate Finance course has helped me, as a student, gain intelligence to make informed decisions upon analyzing the details for Sunflower
Nutraceuticals (SNC). These decisions will influence the company's overall growth annually. In addition to various details of the SNC Company I
have also made various decisions in each of the phases of SNC's simulation which has an estimated values to figure out the results. This paper also
explains how SNC's decisions are influenced with regards to the working capital followed with the final step of evaluating the general affects
associated with the limited ... Show more content on Helpwriting.net ...
This decision increased SNC's EBIT by approximately 200,000. Although SNC's sales and EBIT figures increased, their net working capital and profit
margins will remain at current figures. Additionally, acquiring Atlantic Wellness as a client will help increase SNC's sales significantly but will
sacrifice portions of inventory and accounts receivable. Because of their current cash position SNC must keep a minimum of $3 on hand to meet their
company's operational needs therefore sacrificing portions of inventory and accounts receivable may not be a good idea. However, there is a positive
for SNC. The risk of inventory and accounts receivable can be equalized by negotiating a profitable deal with merchant Ayurveda Natural. II. Leverage
Supplier Discount – SNC accepts the Atlantic Wellness contract allowing them to increase company sales. In addition to the contract with Atlantic
Wellness, SNC also considers the acceptance of Ayurveda Naturals with the contract offer which is favorable to SNC because payment terms reflect a
net gain. III. Tightening Receivable Accounts– Super Sports Centers accounts for 20% of SNC's sales figures. However, Super Sports Centers takes
the approximately 200 days to pay their accounts with SNC which is well above the normal 90–day average. To resolve this issue, SNC

Evaluating Financial Performance
Financing New Ventures
In Chapter 5, we learned about evaluating financial performance. We can evaluate performance by looking at financial ratios and conducting different
forms of analyses. Some useful analyses are trend analysis, cross–sectional analysis, and industry comparables analysis. Trend analysis is used to
examine a venture's performance over time. Cross–sectional analysis is used to compare a venture's performance compared to another company at the
same point in time. Industry comparables analysis is used to compare a venture's performance against the average company's performance in the same
industry. Next, we looked at MPC income statements and balance sheets. A major part of MPC is cash burn. Cash burn is the... Show more content on
Helpwriting.net ...
One is the percent of sales method. This method makes projections based on the assumption that certain costs and selected balance sheet items are best
expressed as a percentage of sales. The other method is the constant ratio method. This method shows the variant of the percent of sales method that
projects selected cost and balance items at the same growth rate as sales. The process to project financial statements is as follows: 1. Forecast sales. 2.
Project income statement. 3. Project balance sheet. 4. Project statement of cash flows.
Works Cited
"Smallbusiness.wa.gov.au." Financial Forecasts. N.p., n.d. Web. 07 Mar.

Inventory and Ski
Case #3 Barnes plans to use the preceding ratios as the starting point for discussions with SKI 's operating executives. He wants everyone to think
about the pros and cons of changing each type of current asset and how changes would inter–act to affect profits and EVA. Base on the data, does SKI
seem to be following a relaxed, moderate, or restricted working capital policy? A company with a relaxed working capital policy would carry
relatively large amounts of current assets in relation to their sales. It would be guarding against running out of stock or of running short of cash, or
losing sales because of a restrictive credit policy. Working capital policy is reflected in a firm's current ratio, quick ratio, turnover of cash and... Show
The only thing on cash budgets should be cash payments and receipts. However, depreciation does affect taxes, which do appear in the cash
budget. In his preliminary cash budget, Barnes has assumed that all sales are collected and, thus, that SKI has no bad debts. Is this realistic? If
not, how would bad debts be dealt with in a cash budgeting sense? (Hint: Bad debts will affect collections but not purchases.) No, it is not realistic
to assume zero bad debts. In almost all situations there are bad debts. When credit is granted, bad debts should be expected. Collections in each
month would be lowered by the percentage of bad debts. Payments would be unchanged, so the result would be that loan balances would be larger
and cash surplus balances would be smaller by the difference in the collection amounts. Barnes' cash budget for the entire year, although not given
here, is based heavily on his forecast for monthly sales. Sales are expected to be extremely low between May and September but then increase
dramatically in the fall and winter. November is typically the firm's best month, when SKI ships equipment to retailers for the holiday season.
Interestingly, Barnes' forecasted cash budget indicates that the company's cash holdings will exceed the targeted cash balance every month except for
October and November, when shipments will be high but collections will not be coming in until later. Based on the ratios in Table IC 15–1,

The Relationship Between Working Capital Management And...
The rapid and unpredictive business changes make the business markets all over the world more competitive and exert competitive pressures on the
firms. It is characterized by considerable amount of uncertainty regarding the demand, market price, and availability of raw materials. The markets in
which real firms operate are not perfectly competitive. Hence this necessitates the firms to have working capital to meet the demand. Working capital
management is important part in industries financial management decision. An optimal working capital management is expected to contribute
positively to the creation of industry value. To reach optimal working capital management firm manager should control the tradeoff between
profitability and liquidity accurately. On the other hand Automobile industry is one of the key industries in India. It helps economy by procuring
foreign currencies through export, it provides more employment opportunities to people both directly and indirectly. so the present study has made an
attempt to analyze the relationship between working capital management and profitability of the selected automobile companies. For analyzing the
data, various statistical tools and techniques are used. The data for analysis is collected from the financial statements published in the annual reports of
the company. It was found that the study of working capital management of the company is very effective and also the firm has to maintain the
liquidity and solvency position to

Essay On Line Of Credit
What level of committed line of credit do we need, and consider how we have been managing working capital in the past and potential growth in
revenues that translates into working capital investment? You need to address the considerations in managing the cash conversion cycle better.
A business line of credit is one that gives capital to meet a whole variety of business needs. When business draw on their business line of credit to get
more working capital, buy inventory, handle seasonal cash flow gaps, pay off other debts, or address almost any other business emergency or
opportunity. On the other hand, a line of credit is a simple financing product that allows business to withdraw funds up to a predetermined amount. The
business will only ... Show more content on Helpwriting.net ...
However, this metric looks at the amount of time needed to sell inventory, the amount of time needed to collect receivables and the length of time the
company is afforded to pay its bills without incurring penalties. In fact, most business acquires inventory on credit, which results in accounts payable.
A business can also sell products on credit, which results in accounts receivable. However, cash is not involved until the business pays the accounts
payable and collects the accounts receivable. Therefore, the cash conversion cycle measures the time between the outlay of cash and the cash
recovery. The cash conversion cycle cannot be observed directly in cash flows, which are affected by financing and investment activities as well;
rather, the cycle refers to the time span between a firm's disbursing and collecting cash (Mueller, (2017)
Should we keep existing cash on the balance sheet for future mergers and acquisitions or should we consider using some of these funds for supporting
our short–term line of credit needs?
Growth and expansion are some of the primary motivations that influence the decisions of a business. A business entity that pursues growth in existing
and new markets stands greater chances of maintaining competitive advantage over its rivals. Other than organic growth, a business can enter mergers
or acquire other firms to accelerate its market

Literature Review On Quantity Theory Of Money
Chapter 2: Literature Review
2.0 Introduction
In this chapter, explains the relevant theories for the research. On the other hand, investigate the effects of how the independent variables affect the
dependent variable. In addition, this chapter also includes a proposed conceptual framework, theoretical models and hypothesis development.
2.1 Review of the Literature
2.1.1 Dependent Variable– Return on Assets (ROA)
Return on assets (ROA) is to measure the value of company's total assets to indicate company's profitability. ROA also gives an idea as to how
efficient management is at using its assets to generate earnings.
Formula of ROA: (Investopedia, 2017)
ROA = Net Income / Total Assets x 100%
Assets are either financed by equity or debt. ... Show more content on Helpwriting.net ...
In accordance to this theory, the purpose of money is only for settling payments for current transactions.
MV = PT ..................................................................... (i)
Where,
M = money supply
V = Velocity of Circulation
P = Average Price Level
T = Volume of Transactions of Goods and Services
Both MV and PT are identical to each other and it also measure the total value of the transactions within the period. In other words, the value of goods
sold is equal to the total amount of money paid.
Keynesian Theory of Money (Keynes, 1935)
Retaining cash–in–hand is important, according to "The General Theory of Employment, Interest and Money". Cash is held for several reasons, such as
speculative motive, precautionary motive and transaction motive.
Speculative motive:
In order to make good use of beneficial exchange rate fluctuations and bargain purchase, cash is withheld at an appropriate level.

Precautionary motive:
It is necessary to maintain a safety level of cash which acts as financial reserve when a company goes into liquidation.
Transaction

Working Capital Concept And Definitions Essay
2–2 Working capital concept and definitions
According to, the first formation of the concept of working capital was possibly first established by Karl Marx (Bhattacharya 2006). Working capital
was defined as current assets minus current liabilities. In general, this definition is also identified as "networking capital". are sometimes Current
assets called as gross working capital. The current assets can be divided into four main elements: (1) cash (2) marketable securities (3) accounts
receivable and (4) inventory on the other hand the three main elements of current liabilities are: (1) accounts payable; (2) expenses payable, accrued
expenses for example wages and taxes; and (3) notes payable. An additional definition for working capital is inventory + accounts receivable –
accounts payable.
Definition of Working Capital
Working capital refers to funds used by the enterprise in their regular operations or processes. Also, the Working capital is the existing fund for
executing daily processes of an enterprise and can be found in its net current assets (Adeniji, 2008). Akinsulire (2008) also defined working capital as
the capital that is important for the daily manufacturing process of goods to be sold by an enterprise. For that reason, it is the excesses of current
assets over current liabilities.
As mentioned before working Capital is a very critical item of the balance sheet of any enterprise. Working capital is given by Current Assets less
current liabilities. If we

Caltron Financial Ratios
III. Analysis Performance of Caltron Ltd. over the three years of operations as compared to the industry averages figures. Financial ratios approach
is used to better understand the overall health of the company. Financial ratios can be divided into five categories. There are: 1.LIQUIDITY OR
SOLVENCY RATIOS a.Current Ratio Theoretically, current ratio of 1 means that the company have cash and cash equivalents that are equal to
current debt. Current ratio above 1 defines that company has sufficient cash and cash equivalents to pay back the current liabilities. While current
ratio below 1 define that company lack of cash and cash equivalents to pay back the current liabilities. In 2001 Caltron Ltd. has the current ratio of
2.99 and it proved that it has high liquidity due the current ratio higher than industry average of 2.7. During 2002 Caltron Ltd. has current ratio of
1.89, which is below the industry average but still manageable where any current ratio above than 1 still consider good liquidity measure of the
company. However, in 2003, Caltron Ltd. has current ratio 1.39 which is lower than the previous year. Caltron Ltd. has a slight higher current ratio in
2001 as... Show more content on Helpwriting.net ...
The industry average of electronic calculator manufacturing company was given 32days for account receivable turnover. For Caltron Ltd., in 2001
the account receivable turnover was 37days, in 2002 the account receivable turnover was 43days and in 2003 the account receivable turnover was
46days. It shows that Caltron Ltd. takes longer time to collect payment from their debtors as compared to the industry average. Over the years, the
number of days needed to collect payment has increased once the sales have been made. This show a poor or week monitoring system of the
receivable account and will probably give bad impact on the cash position of the

Kota Fibres, Ltd
Case Report for Kota Fibres, Ltd. Group 7 BA 141 (WFY) 8/11/2010 Table of Contents Point of View
.............................................................................................................................................. 1 Case Context
............................................................................................................................................... 1 Problem Definition
...................................................................................................................................... 1 Framework of Analysis
............................................................................................................................... 1 Analysis... Show more content on Helpwriting.net ...
Moreover, operating expenses were estimated to be 6 percent of sales in 2001, a figure higher compared to last year's. Interestingly, this was due to the
addition of a quality–control department, for which there had been no indications of a need for one, and the three young nephews of Mrs. Pundir, in
whom she hoped to build an allegiance to the family business. She also proposed to pay dividends of Rs500,000 per quarter to only 11 individuals
who held the entire equity of Kota Fibres, Ltd. Incidentally, these 11 individuals were members of her extended family. III. Problem Definition: Mrs.
Pundir's management of Kota Fibres' cash is inefficient. Because the company is already anticipating the heavy selling season, the problem thus
requires a solution that will generate cash inflows in the immediate future. IV. Framework for Analysis A. Gaining Familiarity B. Identifying the
Problem C. Recognizing Sub–problems D. Identifying Goal/s E. Analyzing the Case F. Recommendation V. Analysis A. Gaining Familiarity Please
refer to the Case Context above. B. Identifying the Problem Please refer to the Problem Definition in the previous page. C. Recognizing Sub–problems
In 2001, Kota Fibres faced several sub–problems that reflected, if not confirmed, the inefficient management of the company's cash holdings.
Frequently overdrawn bank account Unpaid excise tax Delayed customer

Working Capital As A Financial Metric
Working capital is a financial metric that represents the operational liquidity of a business (Working Capital Management Analysis, 2015). Along with
fixed assets (property, plant, and equipment etc.) working capital is considered a part of operating capital. The more positive a company's working
capital is, the more they are required to certify that they are able to continue its processes and has sufficient funds to cover both, growing short–term
debt and upcoming expenses. It is stated by Watson and Head (2013) that decisions relating to working capital and short term financing are referred to
as working capital management, which involve managing the relationship between a firm 's short–term assets and its short–term liabilities. Morrison's
(Wm Morrison Supermarkets plc) was founded in 1899 and with a market share of 11% and listed on the London stock exchange – they have now
become the fourth largest supermarket chain in the United Kingdom (Morrisons–corporate.com, 2015). Throughout this report, it is going to show
Morrison's calculated capital management to date, involving an evaluation of ratios and competitor ratios too.
1.1– KEY WORKING CAPITAL RATIOS
Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable
management (Atrill, 2012). Using capital ratios can be quite beneficial because it allows finance managers to see if they are overspending on assets or
liabilities, what

Colgate Palmolive Financial Analysis
COLGATE–PALMOLIVE ANALYSIS
Section I – Business Overview
Colgate–Palmolive is a leading consumer products company with businesses in two mainproduct segments – Oral, Personal and Home Care; and Pet
Nutrition. The company operates in more than 200 countries and this geographic diversity and balance help to reduce the Company's exposure to
businesses and other risks in any one country or part of the world. The company's main competitors are Proctor & Gamble (PG), Johnson &
Johnson (JNJ), Church Dwight & Company (CHD) and Clorox & Company (CLX).
Section II – Ratio Analysis
Return On Equity (ROE)
The ROE has declined for Colgate–Palmolive from 93% in 2008 to 72% in 2010. But the debt to equity ratio has declined from ... Show more content
on Helpwriting.net ...
Though current ratio does not take into account future sales and other cash inflows in future, the declining trend might be a problem if it continues in
the future.
Quick Ratio
The quick ratio reflects on a company's ability to meet its current liabilities without liquidating inventories that could require markdowns. It is a more
stringent test of liquidity than the current ratio and may provide more insight into company liquidity in some cases. For Colgate–Palmolive, the quick
ratio has declined from 0.73 in 2008 to 0.58 in 2010. While this does not necessarily mean a problem, a higher current ratio and quick ratio analysis
will mean that the company will not have difficulty in meeting its short–term obligations from its operations and not by liquidating its assets.
Section IV
Conclusions
The ratio analysis indicates mostly positive outlook for Colgate–Palmolive as most of the measures look healthy. The ROE has reduced by increasing
assets and reducing liabilities, the cash conversion cycle has decreased and the days payables outstanding has increased.
But Dupont analysis indicates that profitability and efficiency have become lower. Additionally, the working capital has become lower and the current
and quick ratios have declined. To understand the impact of these declining ratios on this company, the industry trend has to be analyzed to see if this
happening throughout

Finance: Net Present Value and Options Principle Objective
FIN/571 Final Examination Study Guide
This study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to
each week's objectives. In addition, refer to each week's readings and your student guide as study references for the Final Examination.
Week One: Foundations of Finance
Objective: Discuss 12 principles of foundational corporate finance.
1.__________ occurs when inaccurate information exists.
a.0 The principle of valuable ideas
b.0 Free–rider problem
c.0 Moral hazard
d.0 Adverse selection
Objective: Discuss 12 principles of foundational corporate finance.
2.__________ refers to situations wherein the agent can take unseen ... Show more content on Helpwriting.net ...
What is the contribution margin?
a.0 $0.90
b.0 $1.70
c.0 $2.50
d.0 Not enough information
Objective: Analyze the effect of price setting on capital budgeting.
12.The wholesale price for Captain John's is $1.00 per loaf, and the variable cost of production is $0.50 per loaf. Captain John's expects that

expansion will allow them to sell an additional 5 million loaves in the next year. What additional revenues minus expenses will be generated from
expansion?
a.0$25,000
b.0$250,000
c.0$550,000
d.0$2,500,000
Objective: Explain the methods, pitfalls, and benefits of capital rationing.
13.Pursuing valuable ideas is the best way to __________.
a.0 achieve extraordinary returns
b.0 get yourself in trouble
c.0 restrain your spending
d.0 avoid risk
Objective: Explain the methods, pitfalls, and benefits of capital rationing.
14.Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is __________.
a.0 undervalued
b.0 overvalued
c.0 caught up in a bear market
d.0 being sold by insiders
Objective: Create a financial plan.
15.__________ says to forecast the firm's cash flows, and analyze the incremental cash flows of alternative decisions.
a.0The signaling principle
b.0The time value of money principle
c.0The principle of incremental benefits
d.0The principle of risk–return
Objective: Create a financial

Fin 571 Managing Growth Simulation
Managing Growth Simulation
FIN/571
Managing Growth Simulation
Introduction
The complete course has reveled us the great idea to influence our trends and intelligence while analyzing the entire details of Sunflower
Nutraceuticals (SNC) company followed with all the decisions of the company which tends to increase their working capital and maximizing the
overall organizational growth potentially with respect to time, as we have figured out the data and change in numbers below which reflects the
growth annually. Moreover in addition to various details of the SNC firm we have also examined various decisions which took place in each of the
phase of SNC's simulation which has an estimated ... Show more content on Helpwriting.net ...
Additionally, acquiring Atlantic Wellness as a client will help increase SNC's sales significantly, but those increase sales does not come without a cost
as the increase sales will come at the sacrifice of inventory and accounts receivable. Sacrificing inventory and accounts receivable is not a good deal
for SNC because of their current cash position as SNC must keep a minimum of $3 lakh on hand to meet their company's operational needs. However,
there is a positive lining for SNC as the risk of inventory and accounts receivable could be balanced by negotiating a profitable deal with merchant
Ayurveda Natural.
IV. Limiting their Receivable Accounts– Since Super Sports Centers account for 20% of SNC's sales figures, those receivable accounts takes the
company approximately 200 days to pay and those 200 days is well above the normal 90–day average. To resolve this issue, SNC could drop Super
Sports Centers and improve their DSO number, but that come at a cost as SNC's sales would drop $2mm.
Phase 2 of SNC's Simulation (Years 2016–2018)
During phase two of the simulation, SNC was presented with three different opportunities and those opportunities include:

I. Expansion of SNC's Online Presence –Since SNC would like to expand their operations into new retail markets its company was presented with an
opportunity to partner with Golden Years Nutracueticals so that they could reach a larger, more diverse consumer base.From 2016
–2018, this

Star River Case Summary
Florida Atlantic University Star River Electronics Ltd. – Case Analysis Case Summary Star River Electronics is a joint venture company that has
gained respect within the industry for producing high quality CD–ROMs to major software companies. In the mid 1990s, multimedia products created
a high demand for CD–ROMs, allowing manufacturing companies of all sizes to enter the market. As a result, an oversupply ensued causing prices
to decline as much as 40%. Star River survived a period of consolidation, and now faced a new threat. DVDs are alternative storage devices that offered
14 times more storage capacity. Surveys showed that DVD disc drives would increase from 7% to 59% of all optical–disc–drive shipments by 2005....
Show more content on Helpwriting.net ...
For net profit margins, ROE, and ROA, Star River experienced a declining trend of 1.22, 1.32, and 1.44 respectively from 1998 to 2001. This is
due to an increase in cost of goods sold, particularly inventory, resulting in compressed margins. Star River's inability to pay down its debt will cause
EBIT and EBITDA to continue to show an increasing trend, until the company can control their Current Liabilities. |Profitability Ratios |1998 |1999
|2000 |2001 | |Gross Profit Margin |53.14% |52.08% |49.80% |49.60% | |Net Profit Margin |7.96% |8.21% |5.28%

Control Process in Management
Home About Site Preserve Your Article Content Quality Guidelines Disclaimer TOS Contact Us Skip to content
4 main steps in control process in management
4 main steps in control process in management are:
Control as a management function involves the following steps:
1. Establishing standards:
Standards are criteria against which results are measured. They are norms to achieve the goals. Standards are usually measured in terms of output.
They can also be measured in non–monetary terms like loyalty, customer attraction, goodwill etc. Some of the standards are as.
a. Time standards:
The goal will be set on the basis of time lapse in performing a task.
b. Cost standards:
These ... Show more content on Helpwriting.net ...
v) Net profits to tangible net worth:
Net worth is the difference between tangible assets (not good will, etc) and total liabilities. This ratio of net worth is used to measure profitability over a
long period.
vi) Net profits to net working capital:

The net–working capital is the operating capital at hand. This would determine the ability of the business to finance day–to–day operations.
vii) Collection period on credit sales:
The collection period should be as short as possible. Any deviation from established collection period should be promptly investigated.
viii) Inventory to net working capital:
This ratio is to determine the extent of working capital tied up in inventory. Generally, this ratio should be less than 80 per cent, ix) Total debt to
tangible net worth: This ratio would determine the financial soundness of the business. This ratio should remain as low as possible.
(d) Comparative statistical analysis:
The operations of one company can be usefully compared with similar operations of another company or with industry averages. It is a very useful
performance measuring device.
(e) Personal observation:
Personal observation both formal and informal can be used in certain situation as a measuring device for performances, specially, the performance of
the personnel. The informal observation is generally a day–to–day routine type. A manager may walk through a store to have a general idea about how
people are working.
3. Comparing

A Research Report On The Economy Of A Relaxed Asset Usage...
a.It could be assumed from the identified ratios that RR is operating in a relaxed asset usage policy. This is due to a lower than industry average in the
current, quick, turnover of cash and securities, and inventory turnover, while the DSO identifies a slower collection.
b.RR is below the industry average, which can identify that they are less profitable. Due to the less profitable nature of RR, it could be assumed that
they have more excessive working capital. According to Borad (2017) companies having relaxed working capital policies assume an advantage of
almost no risk or low risk...(while) on the other hand, there is a disadvantage of lower return on investment because higher investment in the current
assets attracts ... Show more content on Helpwriting.net ...
With excess inventory, it could lead to potential problems with the quality of the product.
e.If the company reduces its inventory in the short run, cash will increase as the purchases of inventory will decrease. In the long run, the company
may make changes that would reduce their cash holdings.
f.The company's DSO is documented at 45.63 days, where the industry average is at 32.00 days. This identifies that the customers aren't paying their
accounts as promptly as those shopping at other industry companies. RR could consider tightening their DSO policy. The four variables that make up a
firm's credit policy include:
i.Credit period. The credit period identifies how long a customer has to pay. RR can reduce its credit policy to a shorter time (thus affecting the
DSO), however, this can potentially discourage sales. ii. Cash discounts. Gives customers a potential discount for paying in cash before the end of the
stated discount period. By implementing a similar policy, it could attract new customers and could also potentially reduce the DSO. iii. Credit
standards. This identifies the credit given to customers. This can boost RR sales, but could also be a negative by increasing bad debts in the firm. iv.
Collection policy. By implementing a tougher collection policy it will decrease the DSO, but could also affect the relationship with the customers.
g.Yes, RR does face risk if it tightens its

Jones Electrical Distribution
Current Position
Jones Electrical Distribution (hereinafter Jones Electric) is currently facing an issue with cash flows, which will ultimately affect the overall
profitability and growth potential for the company. The owner, Nelson Jones, is diligent in paying his suppliers within ten days in order to capitalize
on a two percent early pay discount, but in doing so, has over–extended cash flows. Though the company has been profitable and growing over the past
three years, its current lender, Metropolitan Bank, will not increase a line of credit (LOC) beyond $250,000, a LOC upon which Jones has recently
fully drawn.
In order to ease the tensions of depleting cash reserves, Jones is seeking a higher LOC from another lender, Southern Bank ... Show more content on
Helpwriting.net ...
Either way, the cost of storing inventory could most likely be cut in half, but without knowing lead times of suppliers, this is just a conjecture.
Moreover, not only does the inventory sit in–house not earning revenue for 65 days, but will take another 41 days to actually see the cash from
customers. This brings the operating cycle for the past four years to average 108.4 days and cash conversion cycle to 91 days. This is obviously the
reason for slow cash flows, which has ultimately led to the current cash woes Jones Electrical is facing.
Thus, Jones now seeks more credit from SB&T. SB&T will only allow Jones Electrical to borrow up to 75% ofaccounts receivable and 50% of
inventory. As of the 1Q07balance sheet snapshot, this would only give Jones access to approximately $207,000, which does not even cover
repayment of the current LOC to Metropolitan Bank. Even with the cash on hand, Jones would be $11,000 short of covering the $250,000 due to
Metropolitan Bank, which is an agreement SB&T requires him to severe. If the LOC is based on our forecasted numbers, AR of $318,000 and
inventory of $456,000, Jones would have access to much more cash from SB&T (approximately $466,000). This, of course, assumes our assumptions
are correct.
Moreover, the solvency ratios for Jones Electrical indicate a risky firm, hence the floating rate offered by SB&T (prime plus 150 basis points). While
the debt to asset ratio has improved considerably

Variables Of The Working Capital Requirements Essay
Dependent variables
1– working capital requirement ( WCR )
The study observes the determinants of the working capital requirements of an enterprise. Working Capital Requirements (WCR_TA) were included as
a dependent variable, as used by Shulman and Cox (1985), as a measure of working capital management (cash and equivalents + marketable securities
+ inventories + accounts receivables) – (accounts payables + other payables). Working capital requirements are deflated by total assets to control the
size effect
2– Cash Conversion Cycle (CCC)
Cash Conversion Cycle (CCC) as a measure of working capital management, where a shorter CCC represents the aggressiveness of working capital
management measured by the following Cash Conversion Cycle = Inventory days + Accounts Receivables days – Accounts Payable day
Independent Variable Measures:
1– Operating cash flows deflated by total assets (OCF_TA) the cash flows generated from the routine operations of the enterprise and obtained directly
from the cash flow statement as well as deflated by total assets. The high value of this ratio shows that the enterprise main operation generating enough
cash this also decreasing operation risk.
2– Size
The Size ratios generally measure the enterprise dimensions about the age i.e. for how many years' enterprise start business also measuring enterprise
size and annual growth this dimensions are very important because it is affecting the decision related to policy of managing

Just for Feet Case
Just for Feet, Inc
Just For Feet, Inc. operates retail stores in the brand name athletic and outdoor footwear and apparel market. Just for Feet was found in 1977 with
the opening of a small mall based store and opened its first super store in 1988. Because of their success and high sales volume generates by the
large store Company has concentrate primarily on develop and refining its superstore concept. As of January 1999, they operate 120 superstores,
which 23 superstores opened in fiscal 1997 and 26 superstores opened in fiscal 1998. Just for Feet plans to open 25 stores during fiscal year 1999
and 2000. In 1997, Just for Feet acquired Athletic Attic and Imperial Sports, which are now operated as the specialty store division of the... Show more
All this changes made the CFFO give negative results. The Account payable increased to $ 100,332. All this accounts are making the difference in
the cash flow. A/R has not had much money in its account $15,840 for 1998 and $18,878 for 1999. Cash conversion period is use to analyze cash
cycle and it is an approach measure liquidity. Days inventory held is the number of days from receiving the item until they actually sell it. Just for
Feet held its inventory for 268.88 days in 1998 and 322.69 in 1999 between the receipt days an item until it was sold to the customer. Days of sales
outstanding average of days that it takes for customers to pay for merchandise. Just for Feet took 12.08 days to pay for the merchandize in 1998
and 8.89 days in 1999, the day of sale outstanding average show that just for feet has a strict policy on the payment of their product. Day pay
outstanding is the days between the inventory is received and when payments are made, Just for Feet took 66.74 days to pay their outstanding in
1998 and 80.95 in 1999. Just for Feet is taking longer to pay their supplies. Operation Cycle is an indicator of management performance efficiency,
Just for Feet operation cycle is $28,096 in 1998 and 331.58 in 1999.Cash operation cycle is the elapse between the firm's payment for their inventory
and

Optimize Working Capital with Proven Strategies

Recommended

Recommended

More Related Content

Similar to Optimize Working Capital with Proven Strategies

Similar to Optimize Working Capital with Proven Strategies (10)

More from Katie Ellis

More from Katie Ellis (20)

Recently uploaded

Recently uploaded (20)

Optimize Working Capital with Proven Strategies