fin

Hold marketable securities/ purpose of holding marketable securities/ benefits to the firm (6m) - JAN24

LE

L- liquidity

• convert to cash quickly

• Pay unexpected expenses

E- earn return on idle cash

• earn interest income

• Increase return while maintaining liquidity

Advantages/ benefits payback period -JAN24

SLR

S- simple to calculate

• requires cash flow and initial investment

L- focuses in liquidity

• help firm needing fast cash recovery

R- reduce risk

• reduces exposure to future business risk

5C of credit / how to access cust credit -JAN24

CC

C- character

• to cust willingness to repay credit based on their credit history

C- Capacity

• cust ability to repay credit based in their income

Relax policy & restricted policy -JAN24

Relax policy

• a firm gives credit more easily by offering less strict credit terms to cust

• This can increase sales but increases bad debt

Restricted policy

• a firm can give credit only to cust with good creditworthiness

• Reduce bad debts but may reduce sales

Reason for holding inventory/ why firms hold inventory - FEB25

MAS

M-Meet cust demand

• ensure product are available when cust need them

A- Avoid shortages

• Inventory act like buffer stock to prevent stockout

S- Smooth production

• ensure continuous production by providing sufficient materials