Essay: Techniques of Accelerating Cash Flows

Essay: Techniques of Accelerating Cash Flows
12/04/2011 Comments Off on Essay: Techniques of Accelerating Cash Flows Academic Papers on Business Studies,Sample Academic Papers admin

Sample Essay

The research hypothesis of the current research was that the process of speeding up cash flows was dependent on multiple techniques rather than a single technique. The findings from the evaluation of secondary data enabled the researcher not only to answer the research questions presented in the initial stage of research but also validate the research hypothesis. It was found that companies implement a combination of techniques rather than a single technique for speeding up cash flows. It was found during the research that cash flows were the most important and relevant factor in determining the financial position of a company and that the companies increase their cash flows to be able to manage the business efficiently but also take advantage of any opportunities and avoid any losses due to unexpected changes in the economy.

The three main elements of the financial statements concerning cash flows and the speed of cash flows were found to be inventory, accounts receivable and accounts payable. Debenhams did a very good job in increasing its cash inflow from the receivable and delaying payments to suppliers which enhanced the liquidity of the firm but it has low inventory turnover which needs to be improved further. On the other hand, M&S performed very well in receivable collection and inventory turnover but could not delay payments to suppliers further as Debenhams did. However, its total operating cycle is shorter than that of Debenhams, because it managed to turn over its inventory almost double the time as compared to Debenhams.

Both of these companies tried well to improve the management of the balance sheet items especially receivables and payables which enabled them to speed up cash flows and companies usually apply these techniques simultaneously and as a combination instead of applying one technique at a time to achieve an optimum speed of cash flows. Based on the findings of the secondary research the research hypothesis that the speed of cash flows is dependent on multiple techniques rather than a single technique is validated and accepted. It is thus concluded that the speed of cash flows is not dependent on a single technique and multiple techniques should be applied instead.

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