Method of Calculating length of holding period for stocks and receivables
(A manufacturing unit needs to hold the stock of raw material, work-in-process, finished goods for a length of time in the workplace before dispatching the final products to the customers. This article explains how to calculate holding period for stocks and book debts collection) The working capital cycle (WCC) is the time it takes for…
Read article How to compute working capital limits under Turn-over method/Nayak committee
(Nayak Committee norms for computation of working capital limits) The term working capital means sum of the funds invested at various current assets used in the operating cycle, by the industrial and trading establishments. Operating cycle means the length of time required to convert ‘Non-Cash current assets’, (like raw material (RM), work in process (WIP), finished goods (FG),…
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Organization of the Finance Function
Introduction The organization of the finance function involves structuring financial roles, responsibilities, processes, and systems to ensure the efficient management of financial resources. This function is critical in decision-making and strategy development, providing essential financial information and analysis to support business decisions while ensuring compliance with financial regulations and standards. Key Roles and Responsibilities The…
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What are distress sale, distress price and distressed asset?
Distress Sale: A distressed sale occurs when the owner of the asset like property, stocks or any other assets, pressed for urgent sale which is usually under disparaging conditions. Distressed sales arises on account of funds tied up in an asset which is needed within a short period of time for dire need of money…
Read article Business Ethics & Social Responsibility: An Integrated Perspective
Business ethics involves managing values and resolving conflicts. It refers to the moral principles, policies, and values that govern the way companies and individuals engage in business activities. These principles go beyond legal requirements to establish a code of conduct that drives employee behavior at all levels and helps build trust between a business and…
Agency Problem in Financial Management
An agency problem in financial management refers to a conflict of interest between a company’s management and its stockholders. This issue arises when the goals of the principal (owner) and the actions of the agent (manager) are not aligned, leading to potential inefficiencies or unethical behaviors. The principal-agent problem specifically highlights the situation where the…
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