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Principles of Managerial Finance

Why is short-term financial management one of the most important and time-consuming activities of the financial manager? What is net working capital?

Why is it important for a firm to minimize the length of its cash conversion cycle?

What factors make managing inventory more difficult for exporters and multinational companies?

Why are the risks involved in international credit management more complex than those associated with purely domestic credit sales?

Solution Preview

Why is short-term financial management one of the most important and time-consuming activities of the financial manager? What is net working capital?
Answer:
Short-term financing management is most important and time consuming activity. As we know that the short term financing is used to meet the seasonal and temporary fluctuations in funds position as well as to meet long term needs of the company operations. It is very important because a firm require short term financing for additional working capital needs, to finance the current assets like inventory as well as receivables.
As we know, the short term financing has a various type of risk associated with it like the interest rate risk. For short term financing, the interest rate risk has a huge impact on the short ...

Solution Summary

Principles of managerial finance are analyzed. Why short-term financial management is one of the most important and time-consuming activities of the financial mangers is determine. Net working capital is defined.

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