6 Questions
How is the working capital cycle calculated?
By subtracting the average payment period from the average collection period
What does the working capital cycle measure?
Time between payment of goods supplied and receipt of cash from their sale
What does a longer working capital cycle indicate about a company's financial health?
It may indicate inefficiency in managing cash flow
Working capital cycle measures the time between the payment for goods and the receipt of cash from their sale.
True
A shorter working capital cycle indicates that a company is taking longer to turn its inventory into cash.
False
The working capital cycle does not take into account the time it takes for a company to pay its suppliers.
False
Test your knowledge of the working capital cycle, which measures the time between paying for goods and receiving cash from their sale.
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