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- Use of outdated machinery or technology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.