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Working Capital Management Concepts Worksheet

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In addition, it has a direct effect on the LA's cash conversion cycle because cash is constantly paid for materials but not collected from receivables. LA will need to implement a credit policy that is more stringent than the current one. A company's credit policy is based on: ? How long a customer is given to pay their bills ? How to decide the payment terms for each customer ? How much credit should be extended to each customer ? How to collect the money from the customer LA is working to maintain a positive relationship with their customers, but the company is hurting as a result...
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For example, Mayo has defaulted on 80% of their outstanding payment. This will increase LA's cash conversion cycle. In addition, there will be an increase in the time in which they can include this payment as revenue. LA will need to create a solution to streamline the credit policy, communicate the new credit policy to customers, and continue to maintain a positive relationship...
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