understandig the working process in finance dacision making

May 28th, 2015
Studypool Tutor
Abilene Christian University
Price: $20 USD

Tutor description

day-to-day business activities of the enterprise. It is the life-blood of an enterprise which ensures smooth functioning. The important components of the working capital are inventories, receivables, and cash balances, which keeps on circulating in an enterprise.

Word Count: 9486
Showing Page: 1/28
5. Working Capital Management. Working capital is required for theday-to-day business activities of the enterprise. It is the life-blood of an enterprise which ensures smooth functioning. The important components of the working capital are inventories, receivables, and cash balances, which keeps on circulating in an enterprise. The decision on inventory levels of raw materials/components and finished goods ensures that production and sales do not suffer for want of raw materials/finished products and at the same time excessive stock may not result in increased capital cost for carrying the excessive inventory. Similarly, the levels of receivables is dictated by the credit policy followed by the management. The maintenance of the cash balance is the result of the preference of management towards the profitability or maintenance of liquidity.6. Control Over Financial Activities. Controlling as a management function brings effectiveness in the operational performance, and it presupposes planning and budgeting. Generally, the following tools are employed in controlling the financial activities:(a) Standard Costing. The actual cost is compared with the standard cost to locate inefficiencies and trace out the reasons for it.(b) Budgetary Control. It is exercised through preparing various types of budgets. Capital budgeting, cash budgeting and various types ofoperating budgets.(c) Financial Analysis. Financial analysis has to be carried out by making use of financial ratio

Review from student

Studypool Student
" Excellent work as always thanks so much "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1823 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors