Portfolio insurance has always had an intuitive appeal to investors, particularly if the cost isn't too great. What are some advantages and disadvantages that investment managers should be aware of in regards to option valuation?

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Tod ThielLv2

29 Sep 2019

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As an owner of a small company your role doubles as the company's primary account representative. You are considering ways to reduce working capital and know that one option is to persuade your customers to pay their bills faster. What are some of the advantages and disadvantages to this method should you decide to pursue this option? What are other options you can consider to get customers to pay faster?

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1.The just-in-time inventory system is designed to reduce the inventory period. In essence, companies pay their suppliers to carry the inventory for them. Reducing the inventory period reduces the operating cycle and thus the cash cycle. This reduces the need for financing.

Consider what type of cost is being minimized and what costs are likely to increase. Please, explain. Are JIT inventory policies appropriate for all industries?

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