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Please help me to explain why an increase in the cash operating cycle will decrease profitability.Thank you.
Because there is more money tied up in the working capital which means more borrowing and therefore more interest being paid. There is more risk of there being irrecoverable debts. They are likely to be more inventory holding costs.
Have you not watched my free lectures on this?
Thank you sir.I have watched your lecture some weeks ago but maybe I do not remember this point.
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