Acc1130

Retained earnings be the portion of net income that is unplowed rather than distributed as dividends to sh arholders. Companies do non hold to march on alternative sources of finance by reinvesting the retain earnings so it is a major source of finance. Retained earnings are an immediate fund avail up to(p) and the friendship does not need the permission of other parties to social function it. However a confederation who has large retained earnings, no cash in the beach and a large overdraft will not be able to finance investment from these retained earnings. Tighter extension controller: Companies should dash steps to ensure that customers keep their reference book choke and legal injury of trade. In rules of order to encourage suggestion openment, invoices and statements should be cautiously checked for accuracy and despatched promptly. Customers who have exceeded their credit limits should not be able to obtain goods. But by exerting a tighter credit control over trade debtors, it is likely for companies to reduce their assets. When debtors return faster, the liquidity of the familiarity will step-up as on that point will be more than than bills to use.

Rather than development external sources of finance such(prenominal) as bank overdraft, debt cypher or invoice discounting, the company can make the debtors pay faster and get money without having any expenses to incur. Reducing computer memory levels: if a company has a proportion of its assets in the cast of characters of stock, there is an prospect cost as property are being fastened up a nd cannot be used for more bankable opportu! nities. kind of of being tied up as stocks that money can be used to make a more profitable investment. Delaying payment to creditors: By delaying payment to creditors, funds are retained in the company for other purposes. besides companies can use that money for investment and later gathering money once again to back the creditors.If you want to get a full essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay