Purchase Solution

Explain how rapidly expanding sales can drain the cash resources of a firm. Discuss the relative volatility of short- and long-term interest rates.

Not what you're looking for?

Ask Custom Question

6-1. Explain how rapidly expanding sales can drain the cash resources of a firm.
6-2. Discuss the relative volatility of short- and long-term interest rates.
7-1. In the management of cash and marketable securities, why should the primary concern be for safety and liquidity rather than maximization of profit?
7-2. Briefly explain how a corporation may use float to its advantage.
8-1. Under what circumstances would it be advisable to borrow money to take a cash discount?
8-2. Discuss the relative use of credit between large and small firms. Which group is generally in the net creditor position, and why?
8-3. How have new banking laws influenced competition?

Purchase this Solution
Solution Summary

You will find the answer to this puzzling question inside...

Solution Preview

6-1. Explain how rapidly expanding sales can drain the cash resources of a firm.

To support the rapidly growing sales, there is more and more need for investment in current assets and most of this increase in current assets will be permanent in nature. There will be need for more raw material purchases and stock, more work in progress inventory and more finished goods inventory. Rapid growing sales will also lead to substantial increase in receivables. Hence, rapidly expanding sales needing a buildup in assets to support the growth will drain the cash resources of the firm.

6-2. Discuss the relative volatility of short- and long-term interest rates.

Short term interest rates fluctuates based on demand and supply of funds in the market and hence are more volatile. The long term interest rates are relatively ...

Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Introduction to Finance

This quiz test introductory finance topics.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Motivation

This tests some key elements of major motivation theories.

View More Free Quizzes
Related BrainMass Solutions

  • Finance: Liquidity concepts

    Explain how rapidly expending sales can drain the cash resources of a firm. 2. Discuss the relative volatility of short-and long-term interest rates. 3. What is the significance to working capital management of matching sales and productions? 4.

  • Leverage, Working Capital, EFT, Effective Interest Rate, Lender

    . 2) Explain haw rapidly expanding sales can drain the cash resources of a firm?

  • Current yields on different bonds

    Thus long-term bond has higher duration and they are more sensitive to the change in the interest rate. The decline in price of long term bond will be more if there is increase in the interest rates.

  • Short Term Interest-Bearing Debt

    All things being relative, a short term, interest bearing debt experienced by a small company could certainly have the same, or more significant effect, than a long term debt on a large company. 200 words Long-term debt refers to the permanent long-term

  • SWOT analysis, Managerial Strategy, and Tactics

    The main threat so far is interest rate volatility. Due to their long term debt obligations, any rise in rates will cost the firm dearly. Since rates are almost 0 now, any change will be an increase.

  • relationship between bond prices and interest rates

    125753 Discuss the relationship between bond prices and interest rates. Discuss the relationship between bond prices and interest rates. What impact do changing interest rates have on the price of long-term bonds versus short-term bonds?

  • Working Capital Management

    Would it ever make sense to borrow on a short-term basis if short-term rates were above long-term rates? From the standpoint of borrower, the long-term credit is riskier. The reasons are as follows.

  • Cash management, short term financing, interest rate

    Describe the importance of the cash conversion cycle. ? Compare and contrast various cash management techniques. ? Compare and contrast the various methods of short-term financing. ? Explain the determinants of interest rates ?

  • Financial Analysis based on Walgreens Pharmacy

    Explain. 7. Asses the debt position and rating of the firm's bonds. Discuss how the firm uses long-term and short-term debt and equity. Has its use of leverage changed over time? 8.

View More Related Solutions