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liquidity - Coggle Diagram
liquidity
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MEASURING LIQUIDITY
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current assets = items business owns that are in the for of cash or can easily be turned into cash without major loss
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MANAGING WORKING CAPITAL
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cycle = business buys, produces and sells
involves ensuring there is enough money in system altogether and making sure cash moves through cycle as quickly as possible
meet these two then:
control cash used = keep amount used as low as possible by reducing stock levels, control credit periods, gain as much credit as possible
miminse spending on fixed assets = lease rather than buying new = prevent large outflows = won't drain working capital
plan ahead = estimate amount of cash needed for next few months = ensure adjustments to cycle can be made in good tikme
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