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

Advantage and disadvantage of aggressive working capital, What are the adva...

What are the advantages and disadvantages of the aggressive working capital financing approach? An aggressive working capital financing approach generally results in a lower cost

Management of pension funds, Management of pension funds Employees Prov...

Management of pension funds Employees Provident Fund Organization (EPFO) is the major organization which deals with the pension system in India. The Employees' Provident Fund O

Determine the revenues earned from overseas markets, a) This refers a busin...

a) This refers a business, such as Palmolive-Colgate being able to sell the same product using the same marketing approach all over the world. It is used by firms with global brand

Describe the meaning of net income plus depreciation, The so-called "cash f...

The so-called "cash flow" (net income plus depreciation) is a flow of cash, but is it a flow to the shareholders or to the company? Suppose that net income plus depreciation is

Define the finance function, Q. Define the finance function? Is it a risk-r...

Q. Define the finance function? Is it a risk-return trade off? What is the basic role of a modern financial manager? What is the basic importance of finance function in the mana

Types of financial investments, Question: (a) Give the four main types...

Question: (a) Give the four main types of financial investments and state the risks and bene ts associated to each type. (b) (i) Let k(t; T; s) denotes the return at time t

Market beta, The management of Nelson plc wish to estimate their firm’s equ...

The management of Nelson plc wish to estimate their firm’s equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

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

Describes the certainty equivalent coefficient method, Q. Describes the Cer...

Q. Describes the Certainty Equivalent Coefficient Method? Introduction: - Certainty equivalent coefficient process which makes adjustment against risk in the estimates of futur

Capital budgeting assignment, Assignment 2 Decision Tree Assessing Alterna...

Assignment 2 Decision Tree Assessing Alternatives in Capital Budgeting [see Bailes, J.C., and Nielsen, J.F. (2001, Winter). Using decision trees to manage capital budgets. Manag

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