After mergers and consolidation, the companies face a number of financial problems. The liquidity of the companies has to be established afresh. The merging and consolidating companies pursue their own financial policies when they are working independently. A number of adjustments are required to be made in financial planning and policies so that consolidated efforts
What is the Interpretation of Ratios? The interpretation of ratios is an important factor. Though the calculation of ratios is also important but it is only a clerical task whereas interpretation needs skill, intelligence, and foresightedness. The inherent limitations of ratio analysis should be kept in mind while interpreting them. The impact of factors such
In financial terms, the “application of funds” refers to how a company or an individual uses its financial resources or funds. These funds could come from various sources including operations, investments, borrowings, or owner’s equity. When funds are applied, they can be used for various purposes. The application of funds is typically detailed in a
Ratio analysis is used as a device to analyze and interpret the financial health of an enterprise. Its use is not confined to a finance manager only. There are different parties interested for different purposes. The creditors, bankers, financial institutions, investors, shareholders, and management, all make use of ratio analysis as a tool for evaluating
What is Dividend Decision? The term dividend refers to that part of the profits of a firm that is distributed by the company among its shareholders. It is the reward offered by the company to its shareholders for the investments made by them in the shares of the company. Investors are interested in earning the
What is Receivables? Receivables mean the book debts or debtors and these arise if the goods are sold on credit which may be converted to cash after the credit period. Debtors form about 30% of current assets in India. Debt involves an element of risk and bad debts also. Hence, it calls for careful analysis
What is Inventory? Inventory refers to the goods or materials that a business holds for the ultimate goal of resale (in the case of a product business) or repair (in the case of a service business). Inventory management is a crucial aspect of running a successful business, as it involves the constant monitoring of inventory
Benefits of Holding Inventory Primarily, inventory is held for transaction purposes. Today’s inventory is tomorrow’s consumption. An enterprise cannot ensure uninterrupted production unless it maintains an adequate inventory of raw materials. By holding inventories the firm is able to separate the processes of purchasing, producing, and selling. By doing the separation of these functions. The
What is Forecasting? Forecasting is the process of making predictions of the future based on past and present data and most commonly by analysis of trends. A commonplace example might be an estimation of some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to
What is Cash Forecasting Method? Cash forecasting can be a valuable aid to the cash manager if it is prepared well and used properly. Where it is prepared badly, it can be a significant waste of time for all involved. In companies that make good use of cash forecasting. It may be used as an
