Question

What is purpose of the schematic starting with financing sources for the firm, to macro financial factors such as fiscal and monetary policy? Could the 2007-2010 financial crisis be forecasted by the elements of schematic?

Answer 1

Solution:-

The purpose of the schematic starting with financing sources for the firm, to macro financial factors such as fiscal and monetary policies is:

·         Proper availability of finances from small to large firms

·         To make financing more flexible and affordable according to the assets of the firms

·         To categories the financing sources according to the amount of finance

·         To fulfill the needs of finance

The role of inventories in this schematic: inventories are assets such as machinery, capital, labor etc. of a firm. Inventories plays important role in this schematic by managing finances efficiently. They maintain cash flow in the financial system.