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Analyze the ways in which businesses manage workin...




Analyze the ways in which businesses manage working capital. Determine the single greatest challenge to small businesses and how those challenges may be addressed. Provide specific examples to support your response. Assume that a business has mismanaged its working capital and does not have sufficient cash to cover its financial obligations. Suggest which current assets mismanagement most likely contributed to the shortfall and how management can correct the situation. Provide support for your rationale. Explain the economic and other business environment favors that are likely to impact the availability of short term financing. Provide support for your rationale. 1. Pretty Lady Cosmetics Products has an average production process time of forty days. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty five days, and the firm receives forty days of credit on its purchases from suppliers. a. Estimate the average length of the firm?s short term operating cycle. How often would the cycle turn over in a year? b. Assume net sales of $1,200,000 and cost of goods sold of $900.000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts? 2. Suppose the Robinson Company had a cost of goods sold of $1,000,000 in 2010 and $1,200,000 in 2011. a. Calculate the inventory turnover for each year. Comment on your findings. b. What would have been the amount of inventories in 2011 if the 2010 turnover ratio had been maintained? 3. Given Robinson?s 2010 and 2011 financial information presented in problem 2 and problem below. a. Compute its operating and cash conversion cycle in each year. b. What was Robinson?s net investment in working capital each year?


Paper#5612 | Written in 18-Jul-2015

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