Lumbini Company have inventory conversion period of 35 days, and accounts receivable period is 30 days. Account payable is paid in 25 days. The…
BBA Fundamentals of Finance · 2024 · Solved Question with Answer
Lumbini Company have inventory conversion period of 35 days, and accounts receivable period is 30 days. Account payable is paid in 25 days. The company spends Rs 6 million operating cycle investments each year. Assume a 360-day year:
a. Calculate company's operating cycle and cash conversion cycle.
b. Calculate amount of financing required to support the company's cash conversion cycle.
c. How management might be able to reduce the cash conversion cycle.