4 (a) Explain the meaning of the term ‘working capital cycle’ for a trading company. (4 ma

Question

4 (a) Explain the meaning of the term ‘working capital cycle’ for a trading company. (4 marks)

Answer 1

正确答案：
(a) The working capital cycle illustrates the changing make-up of working capital in the course of the trading operations of a
business:
1 Purchases are made on credit and the goods go into inventory.
2 Inventory is sold and converted into receivables
3 Credit customers pay their accounts
4 Cash is used to pay suppliers.