Cash%20Flows

Cash%20Flows - CASH CONVERSION CYCLE IT IS ESSENTIALLY A...

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CASH CONVERSION CYCLE IT IS ESSENTIALLY A TIMELINE RELATING THE STAGES OF PRODUCTION (OPERATING CYCLE) TO THE COMPANY'S INVESTMENT IN WORKING CAPITAL. THE TIMELINE HAS THREE LEVELS: THE COMPANY PURCHASES RAW MATERIALS. THAT BEGINS THE ACCOUNTS PAYABLE PERIOD AND INVENTORY PERIOD. IN THE NEXT PHASE THE COMPANY HAS TO PAY FOR THOSE RAW MATERIALS. THAT BEGINS THE CASH CONVERSION CYCLE. CASH HAS NOW BEEN PAID OUT. THE JOB IS TO SEE HOW FAST IT CAN COME BACK. THE COMPANY IS STILL IN THE INVENTORY PERIOD. IT HASN'T SOLD ANY GOODS YET. EVENTUALLY THE COMPANY SELLS GOODS, ENDING THE INVENTORY PERIOD. IT ENTERS THE ACCOUNTS RECEIVABLE PERIOD. FINALLY, IT DOES COLLECT CASH ON SALES, WHICH ENDS THE ACCOUNTS RECEIVABLE PERIOD AND THE CASH CONVERSION CYCLE.
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OPERATING CASH FLOWS ARE POSITIVE AND GROWING FASTER THAN REVENUES AND NET INCOME = PRODUCTIVITY OPERATING CASH FLOW IS, AS THE NAME IMPLIES, THE CASH BROUGHT IN BY A BUSINESS OR UNIT LESS ITS CASH EXPENSES. PROFESSIONAL
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Cash%20Flows - CASH CONVERSION CYCLE IT IS ESSENTIALLY A...

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