ARBUS101 Chapter Notes - Chapter 17: Market Price, Public Offering, Revolving Credit
14 Nov 2015
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The value of understanding finance: three of the most common reasons a firm fails financially are, undercapitalization (insufficient funds to start a business, poor control over cash flow. Estimates costs and expenses needed to run a business, given projected revenues. A firm"s spending on supplies, travel, rent, advertising, research, salaries, and so forth are determined. You could invest the you receive today, start collecting interest, and over a year"s time it would grow. That is why, financial managers often try to minimize cash expenditures to free up funds for investment in interest-bearing accounts. They suggest the company pay its bills as late as possible (unless a cash discount is available for early payment) This forces the firm to use its own funds to pay for g/s sold to customers who bought on credit. Financial managers often develop efficient collection procedures like offering cash or quantity discounts to buyers who pay their accounts by a certain time.
