Page 108 - DCOM505_WORKING_CAPITAL_MANAGEMENT

Unit 6: Managing Collection and Disbursement of Working Capital

6.6 Review Questions Notes

1. What are the advantages of concentration banking?
2. How can a firm speed the collection of cash?

3. Suppose a firm’s cash inflows and outflows are variable but completely predictable. How
are the concepts of inventory theory applicable to such a problem?
4. Suppose a firm’s cash inflows and outflows are completely random. What approach might
a firm use to set its minimum working balance?
5. Why might a firm have idle cash?
6. Discuss the criteria that a firm should use in choosing assets in which to invest idle cash.

Answers: Self Assessment

1. True 2. True

3. True 4. False
5. True 6. True
7. Receipts 8. Total costs
9. Optimal working balance

6.7 Further Readings

Books D.R. Mehta, Working Capital Management, Prentice-Hall Inc., 1974.

K.V. Smith, Management of Working Capital, McGraw-Hill, New York.
Khan and Jain, Financial Management, Tata McGraw-Hill.
Pandey, Financial Management, Vikas Annex. 54.J.3 -MBA - Finance - SDE Page
20 of 23.
Prasanna Chandra, Financial Management, Theory and Practice, Tata McGraw-Hill.
V.K. Bhalla, Working Capital Management – Text and Cases, Sixth Edition, Anmol
Publications.

Online links www-935.ibm.com/services/uk/bcs/pdf/working_capital_paper.pdf
www.youtube.com/watch?v=zJCiEIqAxbs

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