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chapter 15 notes - BUS 320 Chapter 15 Notes 1 Working...

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1 BUS 320 Chapter 15 Notes
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2 Working Capital Working Capital-Current assets used in operations. Net Working Capital-Current assets minus current liabilities. Net Operating Working Capital-Current assets minus non-interest bearing current liabilities.
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3 Working Capital Management Finding the optimal levels for cash, marketable securities, accounts receivable and inventory and financing those assets in the least-cost manner.
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4 Cash Conversion Cycle Length of time funds are tied up in working capital. Length of time between paying for working capital and collecting cash from the sale. Inventory Conversion (IC)+ Average Collection (AC)-Payables Deferral (PD)
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5 Cash Conversion Cycle It has been found that shortening the cash conversion cycle results in higher profits and better stock performance.
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6 Inventory Conversion Period The average time required to convert raw materials into finished goods and then to sell them.
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