Question

Explain some of the various measures how a company can manage it's short term liabilities?

Answer 1

1. Inventory management- Inventory management will help in management of short term debt as too much inventory can place heavy burden on cash flows and less inventory will lead to loss of sales so balanced amount of inventory should be kept to keep short term debt in check.

2. Improving recievables process- By improving recievable process we get money on time to pay our short term debts so as to manage it effectively.

3. keeping enough cash reserves- keeping enough cash reserves to pay creditors on time will keep good relations with them which can be helpful in future if there is a slight delay in payment.