Methods of easing cash shortages, Financial Management

Assignment Help:

Q. Methods of easing cash shortages?

There are several techniques which can potentially offset the effects of cash shortages. In the long-term nevertheless the adequacy of cash has to be addressed. Therefore for example cash shortages may be alleviated by

- Postponement of expenditure where reasonable. This wouldn't be feasible in the payment of staff wages but might be in relation to replacing an old piece of equipment that is still working

- accelerating inflows. For instance by more effective use of better credit control, credit collection, improved early payment incentives or even the factoring of debt

- Sale of redundant assets either prior to or after any necessary re-organisation. This may engross the sale of a building where accommodation can be centralised. Other assets perhaps sold on a sale and lease-back basis, although careful consideration will have to be given to the net benefits arising from this

- Re-negotiation of supplier terms or else overdraft arrangements. Especially bank debt may be mortgaged or secured to access lower rates. Suppliers may perhaps agree to lower prices or longer terms if negotiated agreements can be formalised such that a certain level of purchases are made over a period of time.

The significance of each item will depend on the degree of flexibility Frantic has in its financial structure and agreements. The room for manoeuvre may perhaps be limited but a thorough review of all possibilities is likely to yield at least a number of options. Moreover the impact of each potential response depends on how efficient Frantic has been in arranging its affairs in the first place. Ultimately none of the items listed will have a sustained impact if the core problem is not identified and dealt-with.


Related Discussions:- Methods of easing cash shortages

Domestic factors were important than international factor, Why do you think...

Why do you think the empirical studies as regards factors influencing equity returns mainly showed that domestic factors were more significant than international factors, and, seco

Discounted pay back period (dpbp), Discounted Pay Back Period (DPBP) : ...

Discounted Pay Back Period (DPBP) : The discounted payback period is the number of periods taken in recovering the investment outlay on the present value basis.  Discounted pa

What are the ifrs 8 operating segments, What are the IFRS 8 operating segme...

What are the IFRS 8 operating segments IASB issued IFRS 8 operating segments in November 2006 (which replaced IAS 14). This continues IASB's work in its joint short-term conver

Downgrade risk, Market participants' measure the default risk of an i...

Market participants' measure the default risk of an issue on the basis of the credit ratings that the credit rating agencies assign to the issues. Once rating is

Enumerate the field of study dealing with finance, Enumerate the field of s...

Enumerate the field of study dealing with finance The field of study dealing with finance was treated as encompassing three interrelated aspects of raising and administering re

What is the deferred tax asset or liability at the end yr, AB Corp expensed...

AB Corp expensed on the financial stmt $2,000,000 for depreciation expense during the year using straight line depreciation and deducted $3,000,000 of depreciation on the tax retur

Dividends, Company X is expected to maintain a constant 7% growth rate in t...

Company X is expected to maintain a constant 7% growth rate in their dividends, indefinitely. If company X has a dividend yield of 4%, what is the required return on their shares?

The characteristics of the website development project, P Company manufactu...

P Company manufactures and sells a range of children's clothing through its retail shops and is currently designing a website in order to allow customers to purchase products onlin

Cash dividend, what is amount of cash dividend if investor buys share of 1...

what is amount of cash dividend if investor buys share of 100 at premium of 400.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd