On which of the following metrics should a firm focus improvement efforts when the firm wishes to improve its liquidity position?
On which of the following metrics should a firm focus improvement efforts when the firm wishes to improve its liquidity position?
Improving the cash-to-cash cycle time directly impacts the firm's liquidity position. This metric measures the time elapsed between outlay of cash for raw material and receiving cash from product sales. A shorter cycle time means the firm gets cash faster, thereby improving its liquidity.
Cash-to-Cash Cycle Time metric specifically focuses on the flow of cash through the business, which is central to liquidity