Financing Working Capital
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Should an organization pay its bills on time? Why or why not? Under what circumstances should bank or collateralized loans be procured to pay these liabilities?
Why is inventory necessary? Why is it important to turn inventory as soon as possible? How could a company improve its inventory turns?
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Solution Summary
This posting discusses if companies should delay bill payments to finance its working capital. Issues related to short term bank loan and inventory turnover are also described in detail.
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STEP 1
An organization should pay its bills on time because it maintains the reputation of the company. This is important to keep up the good credit standing in the market. How does this help? This is important because it is because of good credit that an organization can get the goods on credit from the market.
Paying the bills is current liabilities. If ...
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