The working capital cycleAs an introduction to the working capital cycle, here is a quick reminder of the main types of cash inflow and outflow in a typical business:InflowsOutflowsCash sales to customersPurchasing finished goods for re-saleReceipts from customers who were allowed to buy on credit (trade debtors)Purchasing raw materials and other components needed for the manufacturing of the final productInterest on bank and other balancesPaying salaries and wages and other operating expensesProceeds from sale of fixed assetsPurchasing fixed assetsInvestment by shareholdersPaying the interest on, or repayment of loansPaying taxesCash flow can be described as a cycle: •The business uses cash to acquire resources (assets such as stocks)•The resources are put to work and goods and services produced. These are then sold to customers•Some customers pay in cash (great), but others ask for time to pay. Eventually they pay and these funds are
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