operating cycle and cash cycle

Discussion 7

Top of Form

 

1. Calculate the operating cycle and cash cycle of your company. How does this compare to the cash conversion cycle? Are they the same?

Timeline  Description automatically generated

 

 

 

 

 

 

 

 

 

 

Schematic  Description automatically generated Watch Video

Operating and Cash Cycles

Duration: 12:54 User: n/a – Added: 12/4/14

 

Link: https://www.youtube.com/watch?v=o2mUyzHfA_Q

 

 

 

2. Behavioral Finance has become an important discipline in the study of the psychology that investors and finance managers have towards decision-making.  Ultimately every decision that we as humans make is based on our experiences.  These experiences create biases.  Lucky is the person that is aware of their biases and is able to control them. Watch and comment on the following video for one of your weekly posts  https://youtu.be/OG96I_Gc-gA    https://youtu.be/wEwGBIr_RIw

· What biases most impact your decision making process? Why?

· Give an example of a bias you’ve seen at work – was it positive or negative? 

· How can we improve your financial management skills by understanding and managing our bias?

 

A picture containing text, indoor, window  Description automatically generated Watch Video

What is Behavioral Finance?

Duration: 6:10 User: n/a – Added: 11/5/20

 

Link: https://www.youtube.com/watch?v=OG96I_Gc-gA

 

 

Watch Video

12 Cognitive Biases Explained – How to Think Better and More Logically Removing Bias

Duration: 10:08 User: n/a – Added: 12/30/16

 

Link: https://www.youtube.com/watch?v=wEwGBIr_RIw

 

 

 

 

 

Peer posts example: Response needed

 

Graphical user interface, text, application  Description automatically generated

 

Bottom of Form

 

 

 

 

 

 

 

 

 

 

 

 

Peer response example to the one above:

 

Tom,

 

You said that the operating cycle does not apply to banks and insurance companies. Could these companies not use their labor/overhead costs to calculate this percentage? I am sure there is a viable way to come up with some sort of operational efficiency metric for companies that do not sell a physical product.

I do agree with you that we are normally unaware of biases until they are pointed out. This is perhaps the main reason that they exist. If people were consciously aware of their own biases, they wouldn’t have them.

Nice post,

 

 

Second peer post Example: (response needed)

Graphical user interface, text, application, email  Description automatically generated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Response example ( to the post above):

 

Hello,

 

I found it interesting that your companies operating, and cash conversion cycles were so close to each other. This must mean that it does not take Lockheed Martin very long to realize revenue at the time of a raw materials purchase. This is good and likely indicates low risk, especially when the company purchases large amounts of inventory.

I think that the bandwagon bias is a common theme in all group settings. Everyone just assumes they should behave and perform like the person that seems to be the “leader”.

I also agree that understanding your own biases can significantly improve your financial performance.

Nice post,

 

 

Third example: Response needed

 

 

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.