Unformatted text preview: With that in mind it is understandable that a company would like to reduce its cash conversion cycle. According to Easton et al., a company can apply various measures in order to reduce operating cycles. For example they can implement better collection procedures, reduce inventory levels or increase trade credit to minimize cash investment for inventory. These actions however could affect a company’s relations with both suppliers and customers. Better collection procedures could interfere with a customer’s own operating cycle forcing them to make adjustments. A reduced inventory level could interfere with the company’s ability to supply a customer’s need in a prompt manner while minimizing cash payments for inventory could affect the supplier’s side of the equation....
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This note was uploaded on 04/06/2012 for the course FINANCE 410 taught by Professor N/a during the Spring '09 term at AIU Online.
- Spring '09