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Working capital management a) Your CFO tells you as finance manager that he feels much...

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Finance

Working capital management

a) Your CFO tells you as finance manager that he feels much safer to have a smaller inventory and cash level than before. What are trade-offs involved in the decision of how much inventory or cash the firm should carry. Answer for both inventory level and cash level separately.

b) Receivables are for many companies a very important asset on the balance sheet and the final step before receiving cash. Please explain what elements a credit policy of companies should contain in order to have high assurance for the collection of the receivables. Provide at least 3 elements.

Payout Policy

Artesia Ltd is making good profits, even though growth is slowing down a bit. So far the company has not paid out cash to its shareholders, however the CFO wants to start paying dividend or start the repurchase program. What questions should the CFO address in order to decide on a possible pay out?

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