0
What else can I help you with?
How do you calculate optimum level of current assets?
It depends on many factors. The demand for the product. when the demand for the product is established. then you make projections for sales. The Return on investment should be high. its a results of net profit/(current assets + fixed assets). The ROI will be high when the denominator is low. So when you keep current asset level low at the year end. the ROI will be high. You can keep the current assets level low only when your cash conversion cycle(CCC) is shorter. you can have shorter CCC. only when the Inventory turnover, and Recievables turnover are high and payables turn over is low (or) Inventory turnover, and Recievables turnover are low and payables turn over is high (if you have good credit terms with suppliers). Over the years it was a bone of contention for many finance manager on how to manage an optimum level.still a lot of work is going on to find out the optimum levels for current assets.
How do you determine the optimal level of current assets?
To determine the optimal level of current assets, businesses should analyze their cash flow needs, operational cycles, and short-term obligations. This involves assessing the inventory turnover rate, accounts receivable collection periods, and accounts payable terms. Additionally, maintaining a balance between liquidity and profitability is crucial; too much in current assets can lead to inefficiencies, while too little can hinder operations. Financial ratios, such as the current ratio and quick ratio, can also provide insights into appropriate levels of current assets.
Ace industries has current assets equal to 3 million dollars The company's currerrent ratio is 1.5'and itsquick ratio is 1.o. what is the firm's level of current liabilities .what isinventories.?
If assets are 3 million and the current ratio is 1.5, the liabilities are 2 million. (current assets = 3 million/ current liabilities of 2 million = 1.5 current ratio.) Inventories have to be 1 million. The quick ratio is current assets = 3 million - 1 million inventory / current liabilities of 2 million equal a quick ratio of 1.
How is a cash budget used to help manage current assets?
A cash budget helps minimize current assets by providing a forecast of inflows and outflows of cash. It also encourages the development of a schedule as to when inventory is produced and maintained for sales (production schedule), and accounts receivables are collected. The cash budget allows us to forecast the level of each current asset and the timing of the buildup and reduction of each.
What is the conclusion on cash management?
Cash is the lifeblood of each and every business. If a firm maintain its cash level at optimum way then it should succeed in long-term. Unless a firm fail to maintain optimum cash level then it has lose its business.
How do you calculate optimum level of current assets?
It depends on many factors. The demand for the product. when the demand for the product is established. then you make projections for sales. The Return on investment should be high. its a results of net profit/(current assets + fixed assets). The ROI will be high when the denominator is low. So when you keep current asset level low at the year end. the ROI will be high. You can keep the current assets level low only when your cash conversion cycle(CCC) is shorter. you can have shorter CCC. only when the Inventory turnover, and Recievables turnover are high and payables turn over is low (or) Inventory turnover, and Recievables turnover are low and payables turn over is high (if you have good credit terms with suppliers). Over the years it was a bone of contention for many finance manager on how to manage an optimum level.still a lot of work is going on to find out the optimum levels for current assets.
Explain what determine the optimum level of consumption for a consumer?
what determines the optimum consumption of an consumer is their income and their demand for goods and services.
How do you determine the optimal level of current assets?
To determine the optimal level of current assets, businesses should analyze their cash flow needs, operational cycles, and short-term obligations. This involves assessing the inventory turnover rate, accounts receivable collection periods, and accounts payable terms. Additionally, maintaining a balance between liquidity and profitability is crucial; too much in current assets can lead to inefficiencies, while too little can hinder operations. Financial ratios, such as the current ratio and quick ratio, can also provide insights into appropriate levels of current assets.
How you can combine liability structure and current assets decision?
The level of current assets and method of financing those assets are interdependent.A conservative policy of "high" level of current assets allows a more aggressive method of financing current assets.A conservation method of financing ( all- equity) allows an aggressive policy of "low" levels of current assets.
The term permanent current assets implies?
some minimum level of current assets that ar not self-liquidating.
Ace industries has current assets equal to 3 million dollars The company's currerrent ratio is 1.5'and itsquick ratio is 1.o. what is the firm's level of current liabilities .what isinventories.?
If assets are 3 million and the current ratio is 1.5, the liabilities are 2 million. (current assets = 3 million/ current liabilities of 2 million = 1.5 current ratio.) Inventories have to be 1 million. The quick ratio is current assets = 3 million - 1 million inventory / current liabilities of 2 million equal a quick ratio of 1.
Liquidity ratios Flying Penguins Corp has total current assets of 11.845.175 current liabilities of 5.311.020 and a quick ratio of 0.89 What is its level of inventory?
2
What is the optimum level of noise prescribed by the WHO?
The answer is 45db. Optimum levels can be huge and damage the ears. Always be cautious.
What is the significance of working capital management to match sales and production?
If sales and production can be matched, the level of inventory and the amount of current assets needed can be kept to a minimum; therefore, lower financing costs will be incurred. Matching sales and production has the advantage of maintaining smaller amounts of current assets than level production, and therefore less financing costs are incurred. However, if sales are seasonal or cyclical, workers will be laid off in a declining sales climate and machinery (capital assets) will be idle. Here lies the tradeoff between level and seasonal production: Full utilization of capital assets with skilled workers and more financing of current assets versus unused capacity, training and retraining workers, with lower financing for current assets.
Nature and scope of working capital?
Nature of Working CapitalWorking Capital Management is concerned with the problems that arise in attempting to manage the Current Assets, the Current Liabilities and the inter-relationship that exists between them. The term Current Assets refers to those Assets which in the ordinary course of business can be, or will be, converted into Cash within one year without undergoing a diminution in value and without disrupting the operations of the firm. The Major Current Assets are Cash, Marketable Securities, Accounts Receivables and Inventory.Current Liabilities are those Liabilities, which are intended at their inception, to be paid in the ordinary course of business, within a year out of the current assets or the earnings of the concern .The basic Current Liabilities are Accounts Payable, Bills Payable, Bank Overdraft and outstanding expense. The goal of Working Capital Management is to manage the firm's Assets and Liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy.The Current Assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. Each of the current assets must be managed efficiently in order to maintain the liquidity of the firm while not keeping too high a level of any one of them. Each of the short term sources of financing must be continuously managed to ensure that they are obtained and used in the best possible way. The interaction between current assets and current liabilities is, therefore, the main theme of the theory of management of workingcapital.
What is the Optimum level for carbohydrates?
Optimal nutrition refers to not the highest but rather the best or most efficient level of nutrient accumulation.
What is the optimum tolerance level of arsenic content in portable water according to WHO?
The optimum tolerance level of arsenic content in potable water according to WHO is 0.05 mg per litre.
