Evaluation of cash and credit management policies as an instrument for avoiding illiquidity

Thesis Overview

<p> </p><p><strong>INTRODUCTION</strong></p><p><strong>1.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</strong><strong>General introduction and background of the study</strong></p><p>The management of an organization’s capital relates to the finance and investment of non-human resources, that is, physical and monetary assets, for the purpose of maximum benefit in terms of profitability. &nbsp;According to Frear (1980) profitability is determined in part by the way in which a company manages its working capital elements, especially the company’s management policies in respect of cash and account receivable/payable. &nbsp;Basically, there would be a drop in profit if the basic element of working capital were raised without a corresponding rise introduction or margins. So one of the principal functions of a financial manager is to provide the arrect amount of each elements of working capital at the right time and in the appropriate place to realize the greatest return on investment. A business which is basically profitable in a capital intensive industry with high level of inventory turnover but does not have an effective/efficient policies for it’s’ working capital constituents, especially cash, can easily be stopped by a temporary set-back into liquidation because it has no room to maneuver. Traditionally, the users of accounting</p> <br><p></p>