BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Desired Cash Balance
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Average Credit Period
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Total Current Asset
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None of the above
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Detailed explanation-1: -To calculate Working Capital Cycle, add the number of inventory days to your receivable days, then subtract the number of payable days. The Working Capital Cycle formula may vary depending on different types of business. For example, a manufacturing business will have more phases than a retailer.
Detailed explanation-2: -What is a Working Capital Cycle? The working capital cycle for a business is the length of time it takes to convert the total net working capital (current assets less current liabilities) into cash.
Detailed explanation-3: -The cost of sales is calculated as beginning inventory + purchases-ending inventory. The cost of sales does not include any general and administrative expenses. It also does not include any costs of the sales and marketing department.
Detailed explanation-4: -DSO = (Average Accounts Receivable / Revenue) * 365 Days.