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Reply of question you answered before
Sry I didn’t ask you question yesterday! It wasn’t me
I didn’t get your answer! See here increase in cash operating cycle can increase profit ? Like receivable will be higher and so profits can be higher and increase in cash operating cycle can only make liquidity problems how it decreases profits?If receivables days are more (and therefore the operating cycle increases) then they are taking longer to collect receivables. Therefore it is taking them longer to receive cash and they are losing interest that they could have been earning and therefore making less profit.
When receivables time increase how can they lose interest? What interest comes here
The longer they take to collect their receivables the longer they are without the cash so they are losing interest that they could have earned on the cash.
Watch my free lectures on the management of receivables.
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