Archive about 'Working Capital Management'
How To Improve Tight Liquidity Or Cash Flows Situation of a business
Tweet My company is in very tight cash flow situations. Can you tell me how to improve the company’s present tight cash flow situations? Without the right level of liquidity ( cash is not equal to profit), a company might be not able to survive. Hence, the company’s first task is to improve its cash […]
What Are The Reasons For The Decrease or Depletion Of Working Capital?
Tweet The company I am working in has Working Capital problems. My accountant told me the working capital problems are due to the decrease or lack or depletion of working capital. Can you please tell what could have caused such depletion or decrease in working capital? Answer: The lack or depletion of working capital are […]
List Of Topics Under The Heading Working Capital Management/Control
Tweet It Is critical to manage the company’s working capital as cash generated from the working capital cycle is not synonymous with profit generated from the business. Without adequate cash/liquidity, profitable companies can not survive as they need to pay their liabilities from cash and not from profit. Some examination questions test the candidates […]
Explain how to compare Costs of factoring Accounts receivables with the costs on bank loan
Tweet Part 1 describe the features of factoring, its advantages and disadvantages and illustration on how to compute the maximum loan or advance a firm can get from the factoring company. In this Part 2, we see a simple illustration comparing the cost of factoring against bank offer. Illustration : Accept Factoring Or Accept Bank […]
What is factoring,its advantages,disadvantages and how to compute the maximum amount of loan or advance by factoring the Accounts Receivable
Tweet This part describe the features of factoring, its advantages and disadvantages and illustration on how to compute the maximum loan or advance a firm can get from the factoring company. In Part 2, we see a simple illustration comparing the cost of factoring against bank offer. What is factoring? <!–[if !supportLists]–> <!–[endif]–>A source of […]
How To Compute And Improve The Cash Conversion Cycle(CCC) (Part 2)
Tweet Part 1 describe what’s cash conversion cycle(ccc) which basically is the length of time(in terms of days) working capital is tied up. This article looks at how to compute cash conversion cycle and how we can improve it: COMPUTATION OF CASH CONVERSION CYCLE Company XYZ has the following: Annual sales of $15m […]
Working Capital Policies/Approach
Tweet For a firm, it can exercise a few options/policies when considering the risk return aspect when managing its working capital. The following describe the different policies: (1) MATCHING OR HEDGING APPROACH/POLICY This approach or policy is a moderate policy that matches assets and liabilities to maturities. Basically, a firm uses long […]
Cash Conversion Cycle(Part1 Of 2)
Tweet Cash Conversion Cycle(CCC) is a close loop cycle which encompasses the following five (5) stages of normal operating business cycle: 1 The receipt of raw materials from suppliers; 2 Conversion of the raw materials into work in progress and finally to finished products; 3 Delivery of goods and billings to the customers/accounts receivable […]
Classification of Assets & Classification of Sources Of Funds
Tweet Tabulated below for easy reference are the classification of assets and the sources of finance Classification Of Assets Classification of Sources of Financing Divided into 2 types: Divided into 3 types Permanent Assets Expected to be held for more than a year Two types viz:- · Fixed asset […]
Factors Affecting Working Capital Level
Tweet Some of the factors that can affect a firm’s working capital level are: Type/Nature Of Business Working capital level is generally higher in manufacturing based versus service base organizations Depends on the Volume of Sales The higher the sale, the higher is the level of working capital required […]