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June 2013 exam paper
Question on TGA Co, part (a)
There is a decrease in operating cash cycle of 73 days.
A decrease in cash cycle means the Working capital used will decrease too right ?
Therefore, this will result in higher profitability but result in a weaker liquidity because there is a higher risk of running out of inventory or cash right ?
But why in the answer key it states that this change will improve the firm’s liquidity and profits ?
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