Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Question
Chapter 27, Problem 10CQ
Summary Introduction
To describe: The merits and demerits of the use of excess cash as with excess cash the firm has to make a quick payment to the suppliers.
Cash Management:
Cash management refers to managing of cash related activities in the operation of the business as how much cash should be kept in business and how much to be invested in assets.
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Students have asked these similar questions
A. What is the incremental cash flows from switching credit policies?
B. What is the cost of switching?
C. What is your recommendation?
D. What is the break-even sales increase? Interpret.
Define the following terms: inventory conversion period, average collection period, and
payables deferral period. Explain how these terms are used to form the cash conversion
cycle. How would a reduction in the cash conversion cycle increase profitability? What
are some actions a firm can take to shorten its cash conversion cycle?
V.
How would a reduction in the cash conversion cycle increase profitability?
Chapter 27 Solutions
Corporate Finance
Ch. 27 - Cash Management Is it possible for a firm to have...Ch. 27 - Cash Management What options are available to a...Ch. 27 - Prob. 3CQCh. 27 - Cash Management versus Liquidity Management What...Ch. 27 - Prob. 5CQCh. 27 - Collection and Disbursement Floats Which would a...Ch. 27 - Prob. 7CQCh. 27 - Short-Term Investments For each of the short-term...Ch. 27 - Prob. 9CQCh. 27 - Prob. 10CQ
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Similar questions
- Cash conversion cycle can be reduced by reducing the payables deferral period which will slow down the payment to suppliers. Is it True or False?arrow_forwardWhat should a firm’s goal be regarding the cash conversion cycle,holding other things constant? Explain your answer.arrow_forwardWhat are some tools that companies have to manage their (net operating) working capital? Provide examples of inventory and receivables management techniques. What is the Cash Conversion Cycle and why is this a useful metric? Are there risks if this is too low?arrow_forward
- Which of the following situation is better for the company? O a. All of these O b. Cash conversion cycle should be shorter Oc. Cash conversion cycle should longer O d. Fixed cash conversion cyclearrow_forwardDiscuss the advantages and disadvantages of options in the financial markets? What is Cash conversion cycle? How the company can improve its cash conversion cycle? give three suggestionsarrow_forwardIs this statement true or false? please explain in detail The Discounted Cash Flow method is the one of best ways to assess the impact of a major investment in an alternative production lay out, as the gains efficiency will be counterbalanced by changes in in inventory levelsarrow_forward
- What is temporary cash surplus and what should be done with it?arrow_forwardWhat are some pros and cons of having a high cash ratio?arrow_forward3. Consider the monetary neutrality. Suppose that the central bank changed the money supply. According to economists’ assumption on monetary neutrality, could the change affect the employment in the short-run? How about in the long-run? Short-run: Long-run:arrow_forward
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