Short terms working capital, Financial Management

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Q. Short terms working capital?

1) Indigenous bankers: private money leased and other country banking used to be the only source of finance prior to the establishment of the commercial bank they used charge every high rate of the interest and exploited the customer to the largest extent is possible . now a day with the develop of commercial bank they have lost their monopoly . but every today some business house have to depend on the indigenous bankers for obtaining loans to ,meet their working capital requirement

2) trade creditors: trade creditors refers to the credit extended possible Interest. The firm may lose sales also because of shortage of stock and tight credit policy of the firm. Thus there is a cost of illiquidity which increases with the less and less level of current assets. The optimum level of current assets can be determined by balancing the cost of liquidity and the cost of illiquidity. The optimum level is the point where the total cost is the minimum.


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