Q7. Khadi and Village industries, being a part of MSME, were facing some issues related to sales withbig brand apparel industry competitors. The length of production is small and labour intensivewhereas the inventory holding period and average collection are huge. Reducing operations is alsonot a way to deal in this situation.You are appointed as a finance manager in the company to deal with the problem of Working CapitalManagement. You further faces the problem of compromising between liquidity and profitability. Whatstrategies you would adopt as finance manger to solve this problem.
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Answer:
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Explanation:
khadi and village industries, being a part of MSME were facing some issues related to sales with big brand apparel industry competitors. the length of production is small and labour intensive whereas the inventory holding period and average collection are huge. Reducing operations is also not a way to deal in this solution.You are appointed as a finance manager in the company to deal with the problem of working capital management. You further faces the problem of compromising between liquidity and profitability. What strategies you would adopt as finance manager to solve this problem
Strategies you would adopt as finance manger to solve the problem of Working Capital Management.
Explanation:
- Finance manger have to find out the problems that arise in managing the current assets with the current liabilities.
- The finance manager has to administer current assets and liabilities so that the working capital of the firm can be maintained.
- The finance manager should formulate the policies with regard to profitability, risk and liquidity.
- The finance manager should manage the cash inflow and outflow to determine optimum cash balance.
- The finance manager can formulate the credit policy and maintain the receivables.
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What strategies you would adopt as finance manger to solve this problem.
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