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One of the main deities of the financial manager is to keep a sound liquidity position for the firm hence the dues are settled as and while they mature. Separately from this the finance manager has to make sure that enough cash is obtainable for the smooth running of operating activities and also for paying of dividends, taxes and interest. Under a nut shell there must be availability of cash to convene the firm's obligation and while they turn into due. The real dilemma that the finance manager faces is to chose on the quantum of cash balance to be not kept in such a manner that at any specified point of time there is neither cash deficit nor cash surplus. Cash is a non-earning asset; thus, cash must be kept at the minimum level. The cost of holding cash is the loss of interest or return had which cash been invested beneficially. The surplus cash cost is the cost of interest or opportunities foregone. The cost of shortage or deficit of cash is measured through the cost of raising funds to meet the deficit or in extreme cases the cost of restructuring, bankruptcy and loss of goodwill.
Cash shortage can results in sub-optimal investment and sub-optimal financing decisions.
The firm must keep optimum just sufficient neither more nor too little cash balance. There are several models used to compute the optimum cash balance such a firm ought to keep. However the most broadly termed as model is Baumol's model. This is chiefly used while cash flows are predictable.
Budgetary control According to CIMA the establishment of budgets relating the responsibilities of executive to the requirement of a policy and the continuous comparison of achi
Working Capital management is affected through two characteristics of current assets that are as follows (i) short life span (ii) swift transformation in the other asset forms.
What is the fastest time financial accounting assignment can be done by your company? It will be a report type format but overview type without going into depth.
Imposed Budgets In this approach to budgeting, top management prepares a budget with little or no help from operating personnel, which is then obligatory upon the employees who
Elements of cost: 1. Material: the substance from which the product is made is known as material it may be in a raw or a manufactured state. It can be direct as well as indir
Cases studies on a orgizations used ABC
Pantheon Company has prepared the following forecasts of monthly sales: July August September October Sales (in units) 4,300 5,100 3,800 2,500 Pantheon has decided that the num
Liquidity ratios Liquidity refers to the ability of concern to meet its current obligations as and when these become due. The short term obligations are met by realizing amount
Selling product for 31.00 and Variable expenses are 26.00. In order to cover the fixed expenses 31,500 hats must be sold what is the Total fixed cost in dollars?
How much to order Supposing the estimated annual usage of a component by Machinery Ltd is 20,000 units. Usage is even throughout the year and only one order per annum is place
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