Conservative approach of financial management, Financial Management

Q. Conservative Approach of Financial Management?

An exact matching plan may not be followed in practice. A firm may adopt a conservative approach in financing its current and fixed assets. The financing policy of the firm is said to be conservative when it depends more on long-term funds for financing needs. Under a conservative plan, the firm finances its permanent current assets and a part of temporary current assets; it stores liquidity by investing surplus funds into marketable securities.

The conservative plan relies heavily on long¬ term financing and, therefore, is less risky. The conservative financing policy is shown in figure aside. Note that when the firm has no temporary current assets (e.g., at (a) and (b)); the long-term funds released can be invested in marketable securities to build up the liquidity position of the firm.

Posted Date: 6/20/2013 2:49:08 AM | Location : United States

Related Discussions:- Conservative approach of financial management, Assignment Help, Ask Question on Conservative approach of financial management, Get Answer, Expert's Help, Conservative approach of financial management Discussions

Write discussion on Conservative approach of financial management
Your posts are moderated
Related Questions
1. A standard arrangement for the orderly retirement of long-term debt calls for the corporation to make regular payments into a(n):      A)  custodial account.     B)  sinking

X company sells on terms of 2/10, net 40. Gross sales last year were $4.5 million and accounts receivable averaged $ 437,500. Half of X''s customers paid on day 10 and took discoun

Q. What is Risk mitigation and how it is monitored? 1. When managing risks, there are several risk strategy options to be considered. Risk may be avoided entirely, transferred

Do you provide assignment help on Miller and Modigliani Model? Do you have experts in this topic? I have an assignment and it is tough to solve me. Please suggest me if you can giv

Define the term- Cash purchases     Shareholders of the target company are bought out completely and have no further stake in business. This is good if predator shareholders want

A fixed income security investor can expect to receive a rupee returns from the following sources: (a) Interest payment, (b) Capital gain or loss at maturity or when so

Explain how a firm determines the optimal level of current assets. The best possible level of working capital is determined by finding the amount that balances the need for liq

One of the well-known soccer clubs in Australia, Sydney, has made a decision to include its players on the club's statement of financial position as assets. These players are signe

Q. Describe about Accountants Report? Accountants' Report - Formal document which communicates an independent accountant's: (1) expression of limited assurance on FINANCIA

Ask questiSuggestion regarding Credit limit. Should it be approved or not, what should be the amount of credit limit that electronics give to Booth Plastics.