Reasons for prolonged working capital operating cycle

Suggest five reasons for prolonged working capital operating cycle

  • Purchase of raw materials in excess/short of requirement
  • Buying inferior, defective materials
  • Failure to secure trade discount, cash discount
  • Defective inventory policy
  • Use of protracted manufacturing cycle
  • Lack of production planning, coordination and control
  • Mismatch between production policy and demand
  • Use of outdated machinery or technology
  • Defective credit policy and slack collection policy
  • Lack of proper monitoring of external environment.

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