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Essay / Research Paper Abstract
This 4-page paper answers questions pertaining to financial strategy and planning. Bibliography lists 5 sources.
Page Count:
4 pages (~225 words per page)
File: AS43_MTstrafinc.doc
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In what order would you implement them? Why? Working capital, incidentally, is defined as a companys ability to pay off its short-term liabilities
(Working Capital, 2011). If a companys assets dont exceed its liabilities (leading to negative working capital), then that company will have problems paying back creditors in the short-term (Working Capital,
2011). The fact that this company is running into liquidity problems suggests that it has few in the way of liquid assets to sell quickly, in order to shore up
the working capital structure. There are a few things that our company can do, however. These include requesting credit from suppliers, issuing equity
(in the form of shares), issuing debt (in the form of bonds) or selling accounts receivables. The best way to combat temporary
cash flow situations is to ask vendors to extend credit on payments. By doing this, more liquidity stays in a company for a longer period of time, thus helping the
company get over whatever cash flow its currently in. The next strategy to be employed is raising equity through sale of shares and/or
issuing debt through the sale of bonds. There are, of course, advantages and disadvantages to doing both - but they bring temporary cash into a cash-strapped company.
The last strategy suggested - and this would be a last-ditch effort - is to sell accounts receivables. Through factoring, a company can receive a percentages
of what is owed. The problem with this, however, is that a huge percentage of those funds are given to the factoring company, and once those receivables are gone, theyre
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