BUSN379 Short-Term Planning

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BUSN379 Short-Term Planning
How are the operating and cash cycles of the firm different? Why are they important? Can you provide some examples…

 

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BUSN379 Short-Term Planning

BUSN379 Short-Term Planning

Discussions Week 7 All Students Posts 17 Pages 

How are the operating and cash cycles of the firm different? Why are they important? Can you provide some examples of transactions that affect the cash account? Certainly inventory is an important aspect of the cash and operating cycles. Inventory may require a significant amount of investments, while it may take a long time to either produce and sell or market the product.

Consider a company such as HP which has to buy parts and pieces for its computers, assemble these parts and then ship the product to the customer or sell them to distributors as Best Buy or Wal-mart. The cycle of producing and selling an item can take a few days. Do you see how these process can affect your cash cycle? To minimize this effect, companies use a just-in-time (JIT) inventory system. What do you believe are some industries or companies that can use this system successfully and why? Would all company benefit from JIT? How can a company use JIT or EOQ to maximize its cash and operating cycles? consider the cash and operating cycle…what industries do you believe would be the most prone to have quicker cash cycles or operating cycles?…