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Short term financial management decisions: cash management techniques

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Among the cash management techniques used by most businesses are those that slow down their bill payments. A good example for this is "Cash Rebates" offered on household items like computers and other electronics.

1. Are these practices sound business decisions? Are they ethical? Explain.

2. What percentage of the rebates offered are actually paid?

Select a business you are familiar with and explain whether you would recommend this business use cash rebates.

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1. Are these practices sound business decisions? Are they ethical? Explain.

The manufacturer provides cash rebates directly to the customer generally at the point of sale to decrease the net price of the item. Consumers elect to credit these cash rebates as down payments against the price of the items. Attractive cash rebates can increase customers, boost spending and stimulate sales by lowering the cost of a product in the eyes of a customer, without actually dropping the price on the shelf. There are practical reasons that make rebates sound business decisions for companies. For example if a business wants to run a temporary promotion, it's a lot easier to ...

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Umut Oltulu, MBA
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  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
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