Weigh the Strengths and Weaknesses of the Various Methods That

question 32

Essay

Weigh the strengths and weaknesses of the various methods that a business may use to ensure access to hard currency.

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Definitions:

Credit Sales

refer to sales where the customer is allowed to pay at a later date, either in a single payment or in installments.

COGS

The direct costs that are attributable to the production of the goods sold in a company, including both materials and labor costs.

Cash Cycle

The period of time it takes for a company to turn its inventory into cash flows from sales, encompassing the time frames of purchasing inventory, selling products, and collecting revenue from customers.

Accounts Receivable

Funds that customers owe to a company for products or services received but not yet compensated for.