trade-related accounts receivable. In fact, they are the least cash-convertible of all of the current assets.
The task of managing a company's activities begins with procuring capital. If this procured capital can be recycled within a year, it is considered a "current liability." If recycling takes a year or more, it becomes a fixed liability." In either case, having use of the capital incurs a capital cost known as interest.
As mentioned earlier, the company uses this interest- bearing capital to lay in stocks of parts and other materials, add value to the materials through manufacturing, then sell the finished goods for a profit, part of which can be recycled into further capital.
The gist of the problem is that people in these companies work so hard to earn the profit used to recycle capital, only to waste that capital by "putting it to sleep" in raw materials