--%>
Assignment Help - homework help

Define Cash to cash cycle

Cash to cash cycle: The concept of cash to cash cycle is financial performance standard, which is associated with the management of a firm’s working capital. The definition of cash to cash or cash conversion cycle is “the length of time a company’s cash is tied up in working capital before that money is finally returned when customers pay for the products sold or services rendered” (Neil and others 2001). This concept does not take into account the concept of depreciation. Cash to cash cycle is calculated using the following formula:

Cash to cash Cycle (C2C) = Inventory+ Receivables-Payables

Where Inventory = (Inventory/cost of goods sold)* 365 days

Receivables = (Average receivables/ Net sales)*365

Average receivables = (Opening receivable+ closing receivable)/2

Net Sales= Gross sales –sales return

Payables = (Average payables /cost of goods sold)*365

Average payables = (Opening payables + closing payables)/2

   Related Questions in Corporate Finance

  • Q : Is net income of a year is doubtful for

    Is the net income of a year money the company made that given year or is this a number whose importance is quite doubtful?

    		•
  • Q : Define capital goods Capital goods :

    Capital goods: Goods employed in producing other goods are termed as capital goods.

    		•
  • Q : Widgets You are required to submit a

    You are required to submit a bid to supply 200,000,000 widgets per year to the State of Illinois for the next five years. Your company has an idle tract of real estate that cost $1,500,000 ten years ago; if your company sold the land today, it would generate $3,000,000 after the taxes were paid. The

    		•
  • Q : Which method must use to valuate young

    Which method must we use to valuate young companies along with high growth but uncertain futures? Two illustrations were Boston Chicken and Telepizza while they began.

    		•
  • Q : Does the book value of the debt

    Does the book value of the debt all the time coincide with its market value?

    		•
  • Q : Vanilla Bonds-Corporate Bonds Define

    Define the term Vanilla Bonds regarding Corporate Bonds?

    		•
  • Q : What is the Capital Cash Flow What is

    What is the Capital Cash Flow?

    		•
  • Q : Tax credit for lease payments problem

    ABC Inc. is planning to lease a computer for $3000 per annum, payable in advance, for a period of 4 years. The lease will cover maintenance costs. ABC CFO feels that if he buys the same computer he should be able to sell it at 15% of the purchase price after 4 years.

    		•
  • Q : Problem on annual mortgage payment You

    You just took out a variable-rate mortgage on your new home. The mortgage value is $100,000, the term is 30 years, and initially the interest rate is 8%. The interest rate is fixed for 5 years, after which the time rate will be adjusted according to the prevailing rat

    		•
  • Q : Financial statements The concept of

    The concept of conservatism has been influential in the development of accounting theory and practice.  A major effect of conservatism is that accountants tend to recognize losses but not gains.  For example, when the value of an asset is impaired, it is wri

    		•