Short-Term Finance and Planning

Operating and Cash Cycles [LO1] ( Professor)

Operating and Cash Cycles [LO1] Is it possible for a firm’s cash cycle to be longer than its operating cycle? Explain why or why not.

#2 Ch. 18:

Short-Term Finance and Planning

Consider the following as you read:

What is the difference between the operating cycle and cash cycle?

#3 Inventory Period [LO3] (Professor)

Inventory Period [LO3] At least part of Dell’s corporate profits can be traced to its inventory management. Using just-in-time inventory, Dell typically maintains an inventory of three to four days’ sales. Competitors such as Hewlett-Packard and IBM have attempted to match Dell’s inventory policies, but lag far behind. In an industry where the price of PC components continues to decline, Dell clearly has a competitive advantage. Why would you say that it is to Dell’s advantage to have such a short inventory period? If doing this is valuable, why don’t all other PC manufacturers switch to Dell’s approach?

#4 Ch. 20: Credit and Inventory Management

Consider the following as you read:

How does a firm’s credit policy affect its sales, bad debts and accounts receivable?

#5 Purchasing Power Parity [LO2] (Professor)

Purchasing Power Parity [LO2] Suppose the rate of inflation in Mexico will run about 3 percent higher than the U.S. inflation rate over the next several years. All other things being the same, what will happen to the Mexican peso-U.S. dollar exchange rate? What relationship are you relying on in answering?

#6 Ch. 21: International Corporate Finance

Consider the following as you read:

Describe interest rate parity and its effect on country currency rates?

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