Describe the main elements of working capital management, Financial Management

Assignment Help:

Question:

(a) Describe the main elements of Working capital management?

(b) Belle Rive Ltd

Belle Rive Ltd has an annual turnover of Rs 60 million of which 80% is on credit. Debtors are allowed one month to clear off all the dues. A factor is willing to advance 90% of the bills raised on credit for a fee of 2% a month plus a commission of 4% on the total amount of debts. As a consequence, Belle Rive Ltd is likely to save Rs 216,000 annually in management costs and avoid bad debts at 1% on the credit sales.

On the other hand, a financial institution has proposed to make an advance equal to 90% of the debts at an interest rate of 18% per annum with a processing fee of 2% on the debts.

Which of the options would you recommend? Support your recommendations by detailed calculations.


Related Discussions:- Describe the main elements of working capital management

Discuss the techniques to manage risks, Q. Discuss the techniques to manage...

Q. Discuss the techniques to manage risks? Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of the four major categories li

Performance budget, Performance budget: it involves evaluation of the perf...

Performance budget: it involves evaluation of the performance of the organization in the context of both overall and specific objectives of the organization. As per the National I

Financial and management accounting, the salaries paid in 2004 is rs 500000...

the salaries paid in 2004 is rs 500000 outstanding is rs 20000 salaries paid in advance for 2004 is rs 30000 what is the actual salary expenditure for 2004 which accounting princip

Ansawar, explain the concept of working capital.what are the factors which ...

explain the concept of working capital.what are the factors which influence the working capital?

Sensitivity analysis, A division of Saron plc is considering introducing a ...

A division of Saron plc is considering introducing a new product.  The product is the result of work undertaken by the division's research and development department - the expendit

Contents of the offering memorandum, Contents of the Offering Memorandum ...

Contents of the Offering Memorandum Executive Summary: It constitutes one of the most important parts of the document and is the key selling chapter of the document. It should

Lien, A legal claim on exact assets which were used to make loan secure.

A legal claim on exact assets which were used to make loan secure.

Operating cycle, disscus the applicability of operating cycle in vegetable ...

disscus the applicability of operating cycle in vegetable in uganda

Capital Strructure., What is the rational for having different types of sec...

What is the rational for having different types of security

Spot transaction hedge/Money market hedge, There are three parts to this qu...

There are three parts to this question. Please answer all parts. The Chicken Company, a company with headquarters in Switzerland, has a receivable of one million euro, which it wil

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd