Question

What can be affect to the company, according to the cash cycle going from year 1...

What can be affect to the company, according to the cash cycle going from year 1 to 4? It can be positive trend or negative trend? explain why?

year 4 3 2 1
Cash cycle 1.17 5.74 10.5 11.6
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Answer #1

Correct Answer:

It is positive trend

Explanation:

Cash cycle is a measurement of the company’s working capital efficiency. It shows the number of days required by a company in generating the revenue from its assets.

Since the cash cycle shows a declining trend from year 1 to year 4, it can be said that the company is taking less time every year in generating cash from its assets therefore it is a positive trend of cash cycle.

End of answer.

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