Working Capital Management
Strategies optimizing current assets/liabilities for operational efficiency.
Formula
Cash Conversion Cycle = Days Inventory Outstanding + Days Sales Outstanding − Days Payable Outstanding
Real World
Amazon manages working capital brilliantly — it collects cash from customers within days but pays suppliers in 60–90 days, meaning it effectively operates on negative working capital and uses suppliers' money to fund growth.
Exam Focus
For 'recommend' questions, link each WCM strategy (e.g. reducing debtor days) to a specific operational benefit for that particular business context.
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