Describe the main elements of working capital management, Financial Management

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.

Posted Date: 11/28/2013 2:32:16 AM | Location : United States







Related Discussions:- Describe the main elements of working capital management, Assignment Help, Ask Question on Describe the main elements of working capital management, Get Answer, Expert's Help, Describe the main elements of working capital management Discussions

Write discussion on Describe the main elements of working capital management
Your posts are moderated
Related Questions
Accounting : Many people believe financial management only relates to bookkeeping and the establishment of accounting reports which reflect those transactions in the books.  Whi

Determine in brief about Venture capitalists Venture capitalists are organisations which take on risky business ventures. They provide finance for and generally require a high

Part 1: Contingency plan Create contingency plans for the following scenarios: > One of your highly qualified consultants has given three months notice and is planning to move to a

Q. What do you signify by Cash? Cash :- For the motive of cash management the term cash not only includes cheques, bank drafts, coins, currency, notes, demand deposits with ban

Suppose a company is quoting swap rates as follows:  7.75 - 8.10 percent yearly against 6-month dollar LIBOR for dollars and 11.25 - 11.65 percent yearly against six-month dollar L

A useful matrix for acquisitions is Ansoff Matrix (business strategy knowledge) Ansoff product/market growth strategies model is a framework for the creation of strategic optio

The equity accounts for Hexagon International are as follows: a.    If Hexagon stock currently sells for $50 per share and a 20% stock dividend is declared, how many new s

What is the annual tax shield to a firm that has total assets of $80 million and a net worth of $55 million, if the average interest rate on debt is 8.5% and the marginal tax rate

ABC Ltd. Produces electronic components with a selling price per of Rs.100. Fixed cost amount to Rs.2,00,000/- 5000 units are produced and sold each year. Annua

Public Financial Statements of a Company The final exercise is the valuation of a publicly held company's equity. You must base your valuation on the company's public financia