Chapter 7: Basic Principles of Management Flashcards
1
Q
Increase the speed of receivables collection
A
- the more quickly customers pay the more quickly we can use those funds
- best to offer discount to speed up process
2
Q
Keep Inventory Levels Low
A
- maintaining large inventory is costly
- ties up space and cash
- techniques are employed to reduce inventory
3
Q
Monitor Payment of Liabilities
A
- don’t pay too early ….don’t want to lose use of cash
- don’t pay later either could damage credit rating and destroy supplier relationships
4
Q
Plan the timing of major expenditures
A
-usually during off-season
5
Q
Invest Idle-Cash
A
-during slow season when there is excess, invest it
6
Q
Liquid Investment
A
-someone is always willing to buy or sale an investment
7
Q
Risk-Free Investment
A
-there is no concern that the party will default on promise to pay its principal and interest
8
Q
The most common form of a liquid investment
A
U.S. government security
