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Dear All
I need a small clarification, in some answers it is written that companies with high operating cycle require higher levels of investment in current assets. but its the current asset ( inventories, receivables) that has boosted the operating cycle why will a firm invest more into it? it is just not making sense to me. pls help??
If there is a higher operating cycle, then the level of working capital will be higher.
If the level of working capital is higher, then the amount invested in working capital is automatically higher.
My free lectures on working capital do discuss the financing of working capital. (The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.)
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