This week’s discussion is related to the “cash conversion cycle”. The CCC is a working capital metric used to evaluate the efficiency of a company’s inventory, AR, and AP turnover, and its relation to the company’s working capital.
Using research, discuss the following:
1) Why can’t most companies have a negative cash conversion cycle like Amazon and Dell have experienced? What advantages does this provide to Amazon and Dell?
2) What could KB Homes and Toll Brothers do to reduce their CCC’s? Why would they want to do this?