Tham khảo tài liệu 'accounting and finance for your small business second edition_7', tài chính - ngân hàng, tài chính doanh nghiệp phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Operating the Business SECTION II adjust to deviations in expected outcome. For example these and other questions may be asked How flexible are expenses What can be cut or eliminated How quickly can we respond How much effort should be devoted to the collection of receivables What additional purchases will be required for unexpected increases in business Can labor be expanded and at what cost Can the current plant handle the additional demand How much money will be needed to finance buildup The answers to these and other questions will show the efficiency and flexibility of the business under varying conditions. By relying on numerous budgets with different ranges of possible outcomes you have the option to consider and be prepared for many more contingencies. Summary Your working capital is principally composed of cash accounts receivable inventory accounts payable and other short-term payables. Cash serves many functions within the business and actually is the medium of exchange for all transactions. The investment of excess or temporarily idle cash should be made with a consideration for the expected yield the associated risk the liquidity of the investment and the transactional costs associated with the exchange of investment with cash. There are many ways to invest excess cash each of which has a risk-and-return relationship and other conditions and constraints. Many of the constraints deal with liquidity and transactional cost considerations. A business selling its product in a large geographic area has to be concerned with the time delays associated with the physical transfers of payment cash . This delay or float costs the business 132 CHAPTER 4 Cash Flow Concerns money. Many methods have been developed to minimize the delay and to speed up the receipt of cash concentration banking lockboxes and others. In addition you can delay cash outflows in order to earn additional interest. You should have a cash flow budget. Determining how cash flows within the .
