Discussion_7th and Peer to peer responses

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RESPONSE FOR THE DISCUSSION:

In your response to your classmates, consider comparing cash generation techniques at your company versus his or her company. Draw distinctions based on the industry and tell your colleagues why those distinctions are necessary for the management of cash flow. Below are additional suggestions on how to respond to your classmates’ discussions:

· Ask a probing question, substantiated with additional background information, evidence or research.

· Share an insight from having read your colleagues’ postings, synthesizing the information to provide new perspectives.

· Offer and support an alternative perspective using readings from the classroom or from your own research.

· Validate an idea with your own experience and additional research.

· Make a suggestion based on additional evidence drawn from readings or after synthesizing multiple postings.

· Expand on your colleagues’ postings by providing additional insights or contrasting perspectives based on readings and evidence.

Discussion_

Author: by Lavanya Katta

Working Capital Management is well known to most people in retail organizations. In any business that is like small or medium or large-scale sectors, people are focusing on working capital management. In the economy, it is important to note all the budget management things in the case of the cash conversion cycle. Inventory is the company's main asset that it converts into sales revenues in order to get more growth to the organization. The rate at which an organization sells it is inventory is an important aspect of its success. Investors consider the inventory turnover rate by checking its sales rates and the inventory is too low that kept the company in danger of losing sales. The time-dependent life cycle of cash which is used for an organization process is can be handled by the cash conversion cycle. In current assets include bill payments like receivables, work-in-process statements, and inventories. Current liabilities include the bill payables and then the organization grows up in real-time situations (NGUYEN, 2020).

Cash Conversion Cycle

As we all have to remember, that cash conversion days are a results calculation. While cash conversion metrics serve as only a proxy of the efficiency of cash flowing through the company, we need to focus harder on what drives each component of cash conversion days. Accordingly, we need to look at our billing practices in order to the business plan in working capital management. Based on the invoices, the management will get billed quickly without errors. In most cases, we have to follow-up on past dues on the days after they are late. In short, we need to attack issues on what can drive cash conversion days upward (Sarfraz, 2018).

Cash Budget

Within the next few sections to grant credit offering credit is a way can demand cash considered to extremely common. When an organization has been selling goods and services investment is tied that is involved with granting credit are not trivial. The obvious reason can extend credit to making an investment and there exist is the chance to allow some delay in payment. From an accounting perspective, the costs of granting credit will not pay as per the view of the credit policy decision. Such receivables before the delivery will have provided an idea that involves a trade-off in between the costs of carrying the receivables. They need to associate first based on a major investment credit that can be including stimulating sales. Based on the employee performances most of the people prefer to make the choices among themselves as an executive (Gupta, 2019).

References

Gupta, R. K., & Gupta, H. (2019). Working Capital Management & Finance: A HAND BOOK FOR BANKERS AND FINANCE MANAGERS. Notion Press.

Khalid, R., Saif, T., Gondal, A. R., & Sarfraz, H. (2018). Working capital management and profitability. Mediterranean Journal of Basic and Applied Sciences (MJBAS), 2(2), 117-125.

NGUYEN, A. H., PHAM, H. T., & NGUYEN, H. T. (2020). Impact of Working Capital Management on Firm's Profitability: Empirical Evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 7(3), 115-125.