extra Flashcards
(6 cards)
1
Q
why doesn’t profit= cash
A
Profit includes all revenues earned and expenses incurred during a period, regardless of whether cash has been received or paid. Cash flow only includes actual cash transactions. Therefore, profit does not equal cash.
2
Q
inventory turnover rate
A
A faster turnover means inventory is selling quickly, which is generally positive for liquidity and efficiency.
3
Q
accounts receivable turnover rate
A
A lower number of days means faster collection and stronger liquidity
4
Q
accounts payable turnover rate
A
A slower rate can help maintain cash but must be balanced to avoid harming supplier relationships.
5
Q
cash cycle
A
A shorter cash cycle means quicker conversion of stock into cash and stronger liquidity.
6
Q
A
