MGT220H5 Chapter Notes - Chapter 7-8: Market Liquidity, Child Custody, Common Carrier
Document Summary
Companies managing and controlling cash: companies with surplus cash try to minimize idle cash by putting extra cash resources into short term deposits. Banks and other financial institutions take this the extreme with very short term borrowing and lending in the overnight money market where borrowed funds plus interest must be repaid at the start of the next business day. For companies without surplus cash, management must still carefully manage its cash resources to minimize any bank loans and other borrowings. Control of cash includes implementing internal control over physical custody of cash on hand and preparation of regular bank reconciliations. Accounts receivable planning and control: a/r is related to sales and if sales department is overly aggressive with their credit policy. It could result in significant increases in bad debts and uncollectible accounts. If credit policies are too tight or restrictive, potential sales could be lost to competitors.
