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3 years ago

Which of the following BEST describes a company's proper liquidity management?

Business

2 answers:

777dan777 [17]3 years ago

7 0

Answer:

The correct answer is letter "A": Liquidity management is a balancing act; managers try to find liquidity levels that are neither too high not too low.

Explanation:

Liquidity management implies companies lowering their risks. This is achieved by having enough cash to leverage the debts incurred because of the business operations. Especially when it comes to banks, liquidity implies the financial institution possessing enough collateral to offset potential risks of not being returned money loaned.

Naddika [18.5K]3 years ago

4 0

Answer:

A. Liquidity management is a balancing act, managers try to find liquidity levels that are neither too high not too low.

Explanation:

Maintaining proper liquidity is an important financial objective of management. Proper liquidity management demands that an entity should be able to meet his short term financial obligation and making sure that liquid assets of the entity are not idle. In order to achieve this, the best way to go is to maintain a level that is neither too high and not too low. Not too high means the entity is not holding too much cash or liquid assets than it currently need to meet its short term financial obligation.

For example, not keeping too much cash in current account but investing them in interest-earning investment assets.

Not too low means the cash or liquid assets held by an entity should not less than the amount needed to meet its short term financial obligation. For example, making sure that the entity has enough cash or readily convertible liquid assets that can be used to pay vendors, rent, interest and meet other short term financial obligation.

Option B is false because keeping too much does not help to maximize short term earnings which is a feature of proper liquidity management. Option C is wrong because there is no guideline to support that deferring coupon payment won`t attract payment and this does not connote proper liquidity management.

Option D is obviously false and does not describe proper liquidity management.

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Romanova Inc. decides to sell an old piece of equipment and receives $5,000 cash for it. The original cost of the equipment was

denpristay [2]

Solution :

The carrying value of the asset = $5000-47000$

$= 3000$

Equipment that is sold for $5000$ , therefore, the profit is $2000.$

The net income gain on the sale - increase, the company is getting a gain from the sale.

The cash from the investing activities-increased. Thus the proceeds from the sale of the assets are recorded as the cash inflow.

The cash from the operating activities -- no change. While we calculate the operating cashflow, the gain on the sale of the assets added back to the income. So there is no change in the total.

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3 years ago

What the Business ethics<br> About USA

AlexFokin [52]

Answer:

General professional conduct, social values, anti-discrimination, fair labor standards, financial responsibility and honest marketing.

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2 years ago

Interest of the building on the principal and interest already gained is what

Furkat [3]

Answer:There u go

Explanation:

Perhaps you have heard of the miracle of compounding. Innumerable investors have used it to their advantage to make their money grow faster than would be the case with simple interest. The great thing about compounding is that it doesn't require additional work on your part: you just sit back and watch your money grow. How's that for an investment strategy?

There are two basic types of interest: simple and compound. Simple interest is the amount of interest earned on the original amount of money invested. Simple interest is paid out as it is earned and does not become part of an account's interest-bearing balance. The invested amount is called principal. Let's say you invest $100 (the principal) at a yearly interest rate of 5 percent. Multiplying the principal by the interest rate gives you an interest payment of $5. This is your simple interest. The next year and each year thereafter, you will be paid $5 of interest on the principal of $100.

Compound interest is interest paid on interest. At 5 percent interest compounded annually, you will have $105 after the first year. If you keep this investment for another year, you will be paid interest on your original $100 and on the $5 you made in interest the first year. The longer you invest your money, the higher your interest payments will grow, not only on your original amount but on the additional interest you earn each year. This is what makes compounding interest so powerful.

When credit unions speak of compounding, they refer to dividends rather than interest.

The longer an investment is allowed to compound interest, the faster your balance will grow and the higher your returns will be. In the case of compounding interest, time really is money. Let's say you invest $1,000 for five years, with an annual interest rate of 5 percent. The difference in your investment earnings from simple and compounded interest will look like this:

Comparison of Simple and Compound Interest

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3 years ago

Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000 units Direct

wlad13 [49]

Answer:

Profit decreases by $322,600

Explanation:

Normal production level = 30,000 units

Cost of direct material per unit =$6.40 , total cost = $6.40*30,000=$192,000

Cost of direct labor per unit =$3.93 , total cost =$3.93*30,000=$117,900

Variable over head cost per unit=$5.80, total cost =$5.80*30,000=$174000

Fixed overhead total cost = $150,000

Production cost with 30,000 units will be;

$192,000 + $117,900 + $174000 + $150,000 =$633900

Normal selling price of product per unit = $48

Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000

Profit obtained : $806,100

Increasing the production to 50,000 units you can calculate the projected cost of production

New production level = 50,000 units

Cost of direct material per unit =$6.40 , total cost = $6.40*50,000=$320,000

Cost of direct labor per unit =$3.93 , total cost =$3.93*50,000=$196,500

Variable over head cost per unit=$5.80, total cost =$5.80*50,000=$290,000

Fixed overhead total cost = $150,000

Production cost with 30,000 units will be;

$320,000 + $196,500 + $290,000 + $150,000 =$956,500

Normal selling price of product per unit = $48

Revenue after normal sell of 30,000 units $48 = 30,000*48=$1440000

Profit obtained =$483,500

Decreased in profit = $806100-$483500 =$322,600

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3 years ago