What is a Cash Management Technique? Is it essential for companies to have cash management system? Who uses cash management technique? What are some advantages or disadvantages of having/not having cash management techniques?© BrainMass Inc. brainmass.com October 25, 2018, 8:05 am ad1c9bdddf
Cash management techniques are financial strategies used by many organizations in order to keep track of the money involved in their businesses, which can include profits, expenditures and debt. These techniques also involve an understanding of how to record and handle a company's finances to ensure it is generating profits and is essential to the health of the company. It is essential for companies to have a cash management system because it involves the collection, concentration and disbursement of cash, which in turn, helps prevent bankruptcy due to insolvency, improve profitability and reduce risk exposure. Being able to manage working capital may be one of the most difficult things a company needs to do in order to survive due to the fact that cash flow is directly correlated to working capital (Cloutier, 2009). It is important for a company to have enough working capital to be able to purchase inventory and pay other operating costs. Companies must also be able to properly manage their business risks, such as large orders not being delivered on time and client defaults on payments. In order to avoid these risks, it is a good idea for a company to diversify their clientele because having multiple sources of cash is better than having to depend on the financial health of others. The best way for a company to manage their cash inflow is to collect payments from clients as quickly as possible by making sure that all payments are processed in a timely manner and that customers with credit receive their invoices well ahead of the due date. Doing this will help maintain their working capital by ensuring that cash flow is steady and ...
The expert evaluates the cash management techniques. The essential companies to have cash management systems are determined,
Capital Budgeting Scenarios
Using net present value, determine the proposal's appropriateness and economic viability.
Prepare a report explaining your calculations and conclusions. Answer the following in your report:
o Explain the effect of a higher or lower cost of capital on a firm's long-term financial decisions.
o Analyze the use of capital budgeting techniques in strategic financial management.
· Format your report according to APA standards.
Proposal C: New Advertising Program
A company wants to invest in a new advertising program. Using the NPV method of capital budgeting, determine the proposal's appropriateness and economic viability with the following information:
? The new program will increase current sales, $10 million, by 20%.
? The new program will have a profit margin is 5% of sales.
? The new program will have a 3-year effect.
? The new program will cost the company $200,000 in the first year.