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Finance and its importance In the Business world - Essay Example

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Working capital is the total amount of cash or ready convertible to cash assets available in a certain company to complete production without stoppage of work. It is a computed amount of cash available that will answer the cost of labor, short term liabilities of the company during its production until all accounts receivables were collected…
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Finance and its importance In the Business world
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Download file to see previous pages Usually corporations only give 7 days credit term at most is 15 days credit term. If it will go more than that then they have to seek bank loans in order to provide buffer or answer the shortfall of cash for its operating cost.
A lending company has available funds for $300.00. The average amount borrowed in a month is usually $200.00. If in case, one borrower name Sally cannot pay the amount of $100.00, they still has a buffer left in the amount of $100.00. In case the borrowings on that week go as high as $300.00, then they are going to the bank to make a short term loan in lower interest rate. This thereby affects their income since the interests that they paid with the bank already eat up a portion of the income that they generate out of the transaction. Still they have to put up the funds, otherwise they cannot maintain their line of borrowers. It is the idea of financing of contingencies and seasonal peaks in working capital.
Inventory is the art of warehousing. It entails a list of the raw materials, equipment and parts, office supplies needed to run the business or production without faltering. The list is readily available at the stores section or at the warehouse for the requisition of other departments. ...Download file to see next pagesRead More
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