Describe the cash conversion cycle

Reference no: EM132179989

Question - Answer all parts

A. Describe the cash conversion cycle. How can a company CFO use this to manage working capital requirements?

B. Evaluate the financing tools that are available to a company CFO to fund short and medium term financing gaps. What are the advantages and disadvantages of each?

C. You are the CFO of a company and are offered a discount of 3% on an invoice of 500,000 for payment within 10 days. Your alternative is to take 60 days credit and fund this through an overdraft with an annual cost of 15%. Which option would you choose?

D. What kinds of restrictive covenants might a bank attach to a term loan? What is the purpose of these?

E. A lower Debt Service Coverage Ratio (DSCR) will result in a lower IRR to equity investors. Discuss.

Reference no: EM132179989

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