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monitoring a business - Coggle Diagram
monitoring a business
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how to improve cashflow
reason 1 :sell stock below normal price = by offering stock at a lower price sales incerase and liqudity /cashflow improves
reason 2 : some expenses be monitored more effectivley and reduced.diffficult to implement as many costs are fixed - they dont vary with the level of output.Could a business seek discounts when making purchases
reason 3 : take out an overdraft which is a short term loan which allows the business to write cheques for more than it has in the bank.This allows the business to continue trading when the cash is tight
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if debt is greater than equity the business is highely geared.if debt is lower than equity the business is low geared.Most business prefer to be low geared as it puts less strain on profits of the business.A high geared business may face
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if profits are poor business may not be able to pay intrest due on its fixed captial any assets offered.security would then be at risk