Relationship between liquidity and accounts receivable

Assignment Help Operation Management
Reference no: EM131639078

Quality Home Health(QHH) has been expanding rapidly over the past five years. Although paper profits(i.e., earnings that are shown on reports but may bot tranlate into actual cash in the bank) have been stable at about 3.5 percent of operating revenues, the liquidity of the company has become a concern. You, the CFO, have noted that days cash on hand has dropped to 12 and that the current ratio has decreased to 0.4, while days in accounts receivable has increased to 122 and inventory turnover has decreased substantially. The CEO would like you to answer the following questions:

1. Why does cash flow and liquidity become a problem during company growth?

2. How can a company have healthy profits but lack funds to pay basic expenses?

3. What is the relationship between liquidity and accounts receivable?   

4. What could QHH do to improve its liquidity?

Reference no: EM131639078

Questions Cloud

Advise a memo advising the investors of the tax implications : Please advise a memo advising the investors of the tax implications of issuing additional shares of stock
Evaluating the returns on leadership development : What outcomes should BP collect to determine the effectiveness of the First level leaders development program?
Determine the dollar values of alpha companys goodwill : Use this information to determine the dollar values of Alpha Company's: Goodwill and Total Assets before Consolidation
Eprs decision associated with a production operation : Assume that you are reviewing the EPRS decision associated with a production operation where P=4000 units per year,
Relationship between liquidity and accounts receivable : Why does cash flow and liquidity become a problem during company growth? What is the relationship between liquidity and accounts receivable?
Process improvement help achieve cost savings and efficiency : How does process improvement help achieve cost savings and efficiency
Five types of product flow-continuous process-assembly line : There are five types of product flow: continuous process, assembly line, batch, job shop, and project.
Customer contact matrix : Customer contact matrix a. Provide three examples of three companies that use various degrees of customer/server contact.
Which are known to produce chest infections : Marclusajo owns a factory in which the relevant process produces chemical fumes which are known to produce chest infections.

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd