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
Q. Explain about Cash Flow Statement? Cash Flow Statement: - This is another process of cash management. A cash flow statement is the statement showing inflows as well as outfl

Fixed income security is a financial obligation of an entity, which promises to pay a pre-specified amount of money at per-specified date. Debt securities (

WHAT IS METHOD FOR FINDING IRR

Q. What do you mean by a Hedge Fund? A Hedge Fund is a fund established by one or else several partners with net worth of at least $1 million (although this maybe falling). It


Q. Give subject matter of participation? Subject matter of participation by and large the workers interests in participation varies with the nature of issues' involved in parti

The first step in valuation process is to estimate the cash flows that are expected to be received in the future. In debt securities, there are two types of possi

Case Study: Silicon Cliffs is a big private company that undertakes consultancy activities and services in the field of building construction. Silicon Cliffs has gained peoples

Treatment of PER IFRS 3 Business combinations necessitate goodwill on gaining to be calculated at the date control is gained. The second gaining gives ROB a 75% holding and

Discuss the benefits and drawbacks of maintaining multiple manufacturing sites like a hedge against exchange rate exposure. Answer:  To set up multiple manufacturing sites can