Question

Discuss the factors that are likely to influence the desired level of cash of a company

Answer 1

Answer-

To manage business's cash flow of a company we must first analyze the components that affect the timing of your cash inflows and cash outflows in the business.

The important metrics that are used are

Accounts receivables It reflects the sales that have not yet been collected in the form of cash

Credit terms are the time period that we promise to pay the customers' for the merchandise or services purchased from our business

Credit policy It is a blueprint you use when deciding to extend credit to a customer

Inventory. It describes the extra merchandise or supplies that we need on hand to meet the demands of customers.

Accounts payable and cash flow. Accounts payable are amounts we owe to your suppliers that are payable in the near future.