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FINANCIAL MANAGEMENT (B.COM )

MODULE I
Introduction to Financial Management
Finance Function
Finance function is the process of acquiring and utilising funds by a
business.
Financial management
According to PJ Hastings, “Financial management is the art of raising
and spending money.”
Nature / Characteristics of financial management
1. Management of money.
2. Financial planning and control.
3. Determination of business success.
4. Focus on decision making.
5. Centralised in nature.
6. Multidisciplinary.
Importance of financial management
1. Successful promotion.
2. Smooth running of business.
3. Coordination of functional activities.
4. Decision making.
5. Determinants of business success.
6. Solution to financial problems.
Objectives / Goals of financial management
Financial Objectives Non-financial objectives
Maximisation of profit Employee satisfaction and welfare
Maximisation of wealth Management satisfaction
Value maximisation Quality services to customers.

A) Maximisation of profit
It is the main objective of the business enterprises. According to this
view, the aim of financial management is to earn maximum rate of
profits on capital employed.
Advantages of profit maximisation
1. it is essential for survival.
2. Achievement of social welfare.
3. It attract investors to invest their savings in securities.
4. It is a measurement of standard.
5. It is a sufficient fund for future expansion.
Criticism of profit maximisation
1. It ignores time value of money.
2. It attracts cut-throat competition.
3. It exploits workers and consumers.
4. It does not take into consideration the welfare of the society.
5. Profit cannot be ascertain well in advance.
B) Maximisation of wealth
The wealth maximisation approach aims at maximising the wealth of
the shareholders by increasing earnings per share.
Advantages of wealth maximisation
1. It considers the time value of money.
2. It is universally accepted approach.
3. It consider the risk factor.
4. It focuses long term growth of the organisation.
5. It guides management in framing suitable dividend policy.
Criticism of wealth maximisation approach
1. It is useful only in large business.
2. It is not socially desirable.
3. It leads to confusion of financial policy.
4. It is an indirect name of profit maximisation.
Difference between profit maximisation and wealth maximisation
Profit Maximisation Wealth Maximisation
Short term objective Long term objective
Aims at maximising profit. Aims at maximising wealth.
It is a traditional approach. It is a modern approach.
It ignores risk factor. It consider risk factor.
It ignores society. It considers society.
It ignores time value of money. It considers time value of money.

C) Value Maximisation
Another objective of financial management is to increase the value
of the organisation. It maximises the long term market value of the
organisation.
Scope of financial management
1. Investment decision.
2. Working capital decision.
3. Financing decision.
4. Dividend decision.
5. Ensure liquidity.
6. Profit management.
7. Cash management
Role / Responsibilities of financial manager
1. Performing financial analysis and planning.
2. investment decision.
3. Financing decision.
4. Dividend decision.
5. Foreign exchange management.
6. Investment planning.
Time Value of Money
The concept of time value is based on the fact money has a time
value. This means value of money depends upon time. The value of
money changes over a period.
Application / Uses of Time Value of Money
1. Bond valuation.
2. stock valuation.
3. Financial analysis of firms.
4. Accept or rejection decisions for project management.
Techniques of time value of money
1. Compounding
The process of calculating future value of present money is called
compounding.
2.Discounting
The process of calculating present value of future money is called
discounting.
Risk
According to Roman, “Risk is the probability of failure to accomplish
an objective.”
Types of risk
1) Systematic Risk
It is a non-diversifier risk. It arises due to factors like economic,
sociological, political, etc.
a) Market risk
It refers to variability in stock prices due to change in investors
attitudes.
b) Interest rate risk
It refers to risk arises due to change in value of security prices due to
change in interest rate in the market.
c) Purchasing power risk
It refers to risk arises due to inflation. It is also known as inflation
risk.
2) Unsystematic Risk
It is a type of risk arises due to factors peculiar to a particular firm
such as labour strike, change in management etc.
a) Business risk
It refers to variability in the actual earnings of a firm from its
expected earnings.
b) Financial risk
It refers to risk arises due to the presence of debt I the capital
structure of a firm.
Return
It simply refers to benefits accrued on original investment made in
an asset or investment.
Approaches to measurement of return
1. Profit approach
2. Income approach
3. Cash flow approach.
4. Ratio approach.
Risk-Return Trade-off
A particular combination where both risk and return are optimised is
known as risk-return trade off.

MODULE II
Investment Decision
Capital budgeting
It is the process of making capital investment decisions.
Nature / Features of capital budgeting
1. Funds are invested in long term activities.
2. it involves large outlays.
3. It involves high degree of risk.
4. it requires careful planning.
5. Gestation period is long.
Role and importance of capital budgeting
1. It involves huge investment in assets.
2. It has long term affect on future profitability.
3. Capital budgeting decision cannot be reversed easily.
4. It involves greater risk.
5. It affect the growth of a firm.
6. It is difficult to make capital budgeting decision.
7. It facilitates cost control.
Limitations of capital budgeting
1. High degree of risk.
2. It is difficult to estimate cost of capital.
3. It is difficult to estimate rate of return.
4. It is difficult to estimate period of investment.
5. It is expensive.
6. It is irreversible in nature.
Capital budgeting process (Steps in capital budgeting)
1. Project generation
Capital budgeting process begins with identification of investment
proposals.
2. Project screening
Each proposal is subject to a preliminary screening in order to assess
technical feasibility.
3. Project evaluation
It is the process of evaluating profitability of each proposal.
4. Project selection
It is a process of selection and approval of the best proposal.
5. Project execution
After the election of project, funds are allocated for them and a
capital budget is prepared.
6. Performance review
In this stage, progress must be reviewed at periodical intervals.
Investment appraisal methods (Techniques of capital budgeting)
Traditional Methods Modern Methods
(Non-discounting techniques) (Discounting methods)
Urgency method Discount pay back method.
Payback period method Net present value method
Average rate of return method Benefit cost ratio
Internal rate of return
Net terminal value method.
Urgency method
In this method most urgent projects are taken up first.
Merits of urgency method Demerits of urgency method
It is a simple technique It is not based on scientific test
It is useful to short term projects Selection is based on situation

Payback period method

It is the commonly used technique of evaluating proposals. It is a
cash-based technique. Pay back period is the period required to
recover the initial cost of the projects.
 Advantages of payback period Disadvantages of payback period
It is simple to understand It ignores time value of money
It is easy to apply It ignores profitability
It is important for cash budgeting, It does not measure rate of return
forecasting etc..
It considers liquidity It completely ignores cash inflow
after payback
It is useful in case of uncertainty
Average rate of return method (ARR)
This method takes into account the earnings expected from the
investment over its whole life. It is based on accounting profit.
Merits of ARR Demerits of ARR
It is simple to understand It ignores cashflows
It is easy to apply It ignores time value of money
It considers the profitability of It does not consider the life of the
investments project
It considers accounting income It ignored the fact profit can be
reinvested
Net Present Value Method (NPV)
Net present value is equal to the present value of all the future cash
flows of a project less the initial outlay of project.
Advantages and Disadvantages of NPV
Advantages of NPV Disadvantages of NPV
It considers time value of Difficult to select discount rate.
money.
This method suitable when cash Complicated calculations
inflows are not uniform.
It is highly useful in case of This method is not suitable
mutually exclusive projects. when project having different
amount of investment.
 It considers cash flow of entire It is not suitable when project
life of the project. having different useful lives.
It focuses wealth maximisation Different discount rate will gives
objective. different present values.
Profitability Index Method (Discounted benefit cost Ratio)
It is the ratio of benefits to cost. It measures the present value of
returns. It is particularly useful to compare project having different
investment outlays.
Advantages and Disadvantages of Profitability Index
Advantages of Profitability Index Disadvantages of Profitability Index
It is scientific and logical. It is a difficult method.
It considers fair rate of return. This method is not based on
accounting principles and concepts.
It is useful in case of capital Difficult to estimate effective life of
rationing. a project.
It considers time value of money. It cannot be used for project having
unequal lives.
It considers all cash flows during
the life of the project.
Internal Rate of Return Method (IRR)
IRR is the interest rate at which the net present value of all the cash
flows from a project equal to zero.
Advantages and disadvantages of IRR
Advantages of IRR Disadvantages of IRR
It considers time value of It involves complicated
money. calculations.
Cost of capital need not be Applicability mainly in large
calculated. projects.
Considers cash flow of the Mutually exclusive projects are
project. ignored.
It gives a true picture of the Different terms of project is not
profitability of a project. considered.
It shows return on original
money invested.

Comparison between NPV and IRR

Similarities
1. Both consider time value of money.
2. Both use cash inflows after tax.
3. Both consider cash inflow through out the life of the project.
4. Both lead to same acceptance or rejection decision.
Difference between NPV and IRR
NPV IRR
It gives absolute return It gives percentage return.
It follows wealth maximisation It does not follow wealth
objective. maximisation objective.
NPV of different project can be IRR of different projects cannot
added. be added.
Cost of capital is assumed to be Cost of capital is to be
known. determined.
It makes decision making easy. It does not help in decision
making.

Net Terminal Value Method (NTV)

This method is based on the assumption that each annual cash
inflows is received at the end of year and reinvested in another asset
at a certain rate of return from the moment it is received till
termination.
Advantages and Disadvantages of NTV
Advantages of NTV Disadvantages of NTV
It is a simple technique. It is difficult to project the future
rate of return.
It is simple to understand. It does not consider comparative
evaluation of mutually exclusive
projects.
It is more suitable for cash
budgeting.
It avoids influence of cost of
capital.

MODULE III
Cost of Equity
Cost of capital
It refers to minimum required rate of return or the cut off rate for
capital expenditures.
Features of cost of capital
1. It is a rate of return required on the projects.
2. It is the reward for business and financial risks.
3. It is the minimum rate of return on a firm.
4. It is a riskless cost of particular source.
Importance of cost of capital
1. Useful in investment decision.
2. Useful in designing capital structure.
3. Useful in deciding method of finance.
4. Optimum mobilisation of resources.
5. Useful in evaluation of performance of management.
Factors determining cost of capital
1. General economic conditions.
2. Risk.
3. Amount of finance required.
4. Floatation cost.
5. Taxes.
Classification of cost of capital
1. Historical cost
It refers to the cost which has already been incurred for financing a
project.
2. Future cost
It refers to the expected cost of fund to be raised for financing a
project.
3. Specific cost.
It refers to the cost of a specific source of a capital.
4. Composite cost
It refers to the combined cost of various source of capital.
5. Average cost
It refers to weighted average cost of capital calculated on the basis of
cost of each source of capital and weights assigned to them in the
ration of their share to total capital fund.
6. Marginal cost
It is the cost of obtaining an extra one of finance.
7. Explicit cost
It is a discount rate which equates the present value of cash inflows
with the present value of cash outflows.
8. Implicit cost
Implicit cost refers to rate of return which can be earned by investing
the funds in alternative investment.
Cost of debt
It is the payment of interest on debentures or bonds or loans from
financial institutions.
Irredeemable debt
These are the debts which are not repayable during the life of the
company.
Redeemable debt
These are the debt issued to be redeemed after a certain period
during the lifetime of a firm.
Capital Asset Pricing Model (CAPM)
This approach was developed by William S Sharpe. According to this
approach, return on equity shares depends on amount of risks
associated with it. If more risk is associated with it, it will provide
more return. If less risk, it will provide less return.
Weighted Average Cost of Capital (WACC)
It simply refers to average cost of various sources of finance.
Merits of WACC
1. It is a straight forward approach.
2. It is useful in capital budgeting.
3. It is more accurate when profits are normal.
4. It consider all changes in the capital structure.
Limitations of WACC
1. It is not suitable in case of low profits.
2. It is very difficult to assign weights.
3. It is not suitable in case of excessive low cost debt.
Source of Finance
1) Share capital
The capital of a company is divided into small units. Those units are
called share.
a) Equity share capital
Shares which are not preference shares are called equity shares.
These are ordinary shares.
b) Preference share capital
Preference shares are those shares which carries preferential right
with respect to payment of dividend and repayment of capital.
2) Debenture capital
Debenture simply refers to acknowledgment of debt.
3) Term Loan
A term loan is granted on the basis of agreement between borrower
and the lending institution.
4) Venture capital
It refers to giving capital to enterprise that has risk and adventure.
5) Lease finance
A lease is contractual arrangement calling for lessee to pay the lessor
for the use of an asset.
6) Retained earnings
A part of profit earned every year shall be retained in the business.
The amount retained in the business is known as retained earnings.

Capital Structure
Capital Structure
According to CW Gerstenberg, “ Capital structure refers to the kind
of securities that make up capitalisation.”
Capitalisation
It is a total amount of capital raised through shares, debentures,
bonds and retained earnings.
Difference between capitalisation and capital structure
Capitalisation Capital Structure
It is a quantitative concept It is a qualitative concept.
It is classified as over and under It is high or low geared.
capitalisation.
It is influenced by internal needs It is influenced by external force.
of the company
It is the total amount of capital It is the make up of
raised through shares, capitalisation.
debentures etc.
Difference between capital structure and finance structure
Capital structure Finance structure
It includes long term and short It includes only long term source
term source of fund. of the fund.
It means the entire liability side It means long term liabilities of
of the balance sheet. the company.
It consists of all source of It consists equity, preference
capital. and retained earning capital.
It is not important while It is important while determining
determining value of firm. value of firm.

Factors determining capital structure

Internal Factors External Factors
Profitability Conditions in the capital market.
Liquidity Attitudes of investors.
Flexibility Cost of financing.
Size of business Legal requirements
Nature of business Taxation policy
Trading on equity Attitude of management
Asset structure
Desire to retain control

Optimum Capital Structure

It is the capital structure at which the weighted average cost of the
capital is minimum and value of firm is maximum.
Essentials / requisites of optimal capital structure
1. Economy
2. Liquidity and solvency
3. Flexibility
4. Simplicity
 5. Safety
6. Maximum return.
7. Maximum control.
Leverage
Leverage may be defined as relative change in profits due to a
change in sales.
Types of leverage
1. Financial leverage
The using of fixed cost capital with the equity share capital is known
as financial leverage. It is also known as capital leverage.
2. Operating leverage
The presence of fixed cost is known as operating leverage. It
measures the changes in operating profit to changes in sales.
Difference between financial leverage and operating leverage
Financial leverage Operating leverage
It show the relationship between It show the relationship between
operating profit and return on profit and return on equity.
equity.
It influences EAT. It influences EBIT.
It is the second stage leverage. It is the first stage leverage.
It deals with financial risk. It deals with business risk.
It deals with investment decision. It deals with financing decision.
It related to liability side of the It related to asset side of the
balance sheet. balance sheet.
Combined leverage
It refers to combination of operating leverage and financial leverage.
It is the relationship between contribution and taxable income. It is
also known as overall leverage.
 MODULE IV
Dividend
It is a part of profit of which is distributed to shareholders of the
company.
Types/Forms of dividend
1. Cash dividend
Dividend paid in the form of cash is called cash dividend. It maybe of
two types
a) Regular dividend: It is the dividend declared and paid at the end of
the accounting period. It is also called final dividend.
b) Interim dividend: It is the dividend declared before declaration of
final dividend.
2. Stock dividend
If company do not have sufficient fund to pay dividend in the form of
cash, company may pay dividend in the form of stock. This is known
as stock dividend.
3. Scrip dividend
It is a type of dividend which is issued by the company to its
shareholders in the form of promissory notes.
4. Bond dividend
It is a type of dividend which is issued by the company to its
shareholders in the form of debentures or bond.
5. Property dividend
Dividend paid in the form of assets is called property dividend.
Dividend policy
It refers to policy relating to the distribution of profits as dividend.
 Factors/Determinants of dividend policy
Internal factors External factors
Stability and size of earnings Trade cycle
Liquidity of funds Legal requirements
Investment opportunities Corporate tax
Past dividend rates General state of economy
Ability to borrow Government policy
Need to repay debt Conditions in the capital market
Attitude of management towards
control
Types of Dividend Policy
1. Stable Dividend Policy
Stable dividend means payment of certain minimum amount of
dividend regularly.
Advantages of stable dividend policy
A) Advantages to Shareholders
1) It increases the confidence of the shareholders.
2) It meets expectation of investors by providing regular income.
3) It stabilises the market value of shares.
4) It attracts investments from institutional investors.
B) Advantages to Company
1) It increases the goodwill of the company
2) It helps in preparing financial planning.
3) It is a sign of continued normal operation of the company.
Dangers of Stable Dividend Policy
1) Once a stable dividend is followed by a company, it is not easy to
change it.
2) If the company cannot pay stable dividend in one year, investors
may lose the confidence.
3) If the company pays stable dividend in spite of its incapacity, it will
be suicidal in the long term.
2) Regular and Extra Dividend Policy
Under this policy shareholders are paid a fixed percentage regular
dividend along with extra dividend.
3) Regular Stock Dividend Policy
Under this policy shareholders are paid bonus shares in addition to
cash dividend.
4) Regular dividends plus stock dividend policy
Under this policy, regular dividend is paid in cash and extra dividend
in stock.
5) Irregular dividend Policy
Under this policy higher rates of dividend shall be paid in the years of
higher profits and lower rates of dividends in the year of lesser
profits.
Optimal Dividend Policy
Optimal dividend policy is one that maximise the firms value or its
share price.
Dividend pay out ratio
It is a type of ratio which establishes the relationship between
dividend per share and earnings per share.
Dividend Theories (Dividend Models)
The important dividend theories are:
1) Modigliani and Miller Theory
2) Walter’s Dividend Model
3) Myron Gordon’s Model
1) Modigliani and Miller Irrelevancy Theory
This theory states that a firms dividend policy has no effect on value
of the firm or shareholders wealth. MM theory states that the value
of firm is unaffected by dividend policy i.e. dividend are irrelevant to
shareholders wealth.
Assumptions of MM Theory
1- There are perfect capital market.
2- Investors behave rationally.
3- There is no floatation and transaction cost.
4- There are no taxes.
5- The firm has a fixed investment policy.
6- No investor is large enough to affect the market price of shares.
Criticisms of MM Theory
1. Perfect capital market does not exist in reality.
2. Existence of floatation cost.
3. Differential rate of tax.
4. Existence of transaction cost.
5. Firms need not follow a fixed investment policy.
Walter’s Dividend Model (Walter’s Dividend Theory)
Prof. James E Walter has developed a dividend model. In this theory,
Walter argues that dividend decision of a firm is relevant. Hence this
is a theory of relevance. This means dividend policy has an impact on
market price of the share. Thus dividend policy affects the value of
the firm.
Assumptions of Walter’s Model
1- The firm does not use external sources of fund.
2- The IRR and cost of capital are constant.
3- Earnings and dividend remains constant.
4- The firm has very long life.
5- All earnings are either distributed as dividend.
Criticism of Walter’s model
1. IRR does not remain constant.
2. Cost of capital do not remain constant.
3. We cannot predict firm has a very long life.
4. Risk factor is not considered.
3. GORDON’S MODEL
Gordon suggested dividends are relevant and it will affect the value
of the firm. According to Gordon, the market value of a share is equal
to the present value of future infinite stream of dividends.
Assumptions:
1. The firm is an all-equity firm.
2. Retained earnings are the only source of financing the investment
3. The rate of return on the firm’s investment (r) is constant.
4. Cost of capital is constant.
5. The firm has long term life.
6. Corporate taxes do not exist.
Residual Theory of Dividend
According to this theory, dividends are paid out of the residual
profits after meeting the requirement of the investment
opportunities.

MODULE IV
Working Capital Management
Working capital
It is the capital required for day to day working of an enterprise.

Nature of working capital

1. It is used for day to day activities of an enterprise.
2. It is the amount invested in current assets.
3. It involves cash management and inventory management.
4. Two major concepts of working capital are gross concept and net
concept.
5. These are financed through short term sources.
Components of working capital
1. Current assets
Current assets are those assets which can be easily converted into
cash.
Eg: Cash, Bank, Debtors, Bills receivables
2. Current liabilities
Current liabilities are those liabilities which are repayable during a
short period of time.
Eg: Sundry creditors, Bills payable, Outstanding expenses.
Concepts of working capital
1. Gross concept
According to gross concept, working capital refers to the amount of
fund invested in the current assets.
The working capital as per gross concept is called gross working
capital.
2. Net concept
According to net concept, working capital refers to excess of current
assets over current liabilities.
The working capital as per net concept is called net working capital.
Types of working capital
1. Permanent working capital
It is the minimum capital required for normal business operations. It
is also called fixed working capital.
a) Initial working capital
Working capital needed at the initial stage is called initial working
capital.
b) Regular working capital
It the amount needed for continuous operation of the business.
c) Cushion working capital
It is the excess of working capital over the regular working capital. It
is also called reserve margin.
2. Variable working capital
It is the working capital which varies with volume of business.
a) Seasonal working capital
It is the additional working capital needed at the busy season.
b) Special working capital
It is the extra working capital to be maintained for special
operations.
Importance/Need/Role of working capital
1. Continuity in business operation.
2. Repayment of long term loans.
3. Helps to fight competition.
4. Increase creditworthiness.
5. Boost efficiency and productivity.
Dangers of deficiency of working capital
1. It may lead to business failure.
2. Trade discount will be lost.
3. Cash discount will be lost.
4. It affects dividend policy negatively.
5. Rate of return falls.
Danger for excessive working capital
1. Rate of return falls.
2. Encourage speculation.
3. Inefficiency may be encouraged.
4. Efficiency of management may deteriorate.
5. Liberal dividend policy encouraged.
Operating cycle
It refers to average time elapses between purchase of raw material
and final cash realization.
Factors determining working capital requirements
1. Nature of business
2. Size of business
3. Production cycle
4. Turnover
5. Terms of trade
6. Business cycle fluctuations
7. Seasonal fluctuations
8. Company policies
Hard-core working capital
It refers to minimum amount of working capital required to invest in
raw materials, stores and working progress.
Working capital management
It simply refers to management of current assets and current
liabilities.
Sources of working Capital
Long term sources Short term sources Transactionary sources
Shares Commercial bank Trade creditors
Debentures Public deposit Depreciation
Loan Indigenous bankers Tax liability
Retained earnings Factoring
Ploughing back of profit
It is the undistributed profit accumulated every year and retained for
meeting financial needs.
Factoring
It is a financial service in which business entity sell its bills receivables
to third party at a discount in order to raise fund.
Cash
Cash means currency and equivalence of cash such as cheque, draft,
money orders etc.
Motives for holding cash
1. Transaction motive.
Cash is necessary for business operation. It is required for financing
transactions.
2. Precautionary motive
The firm need to hold some cash to meet unpredictable needs.
3. Speculative motive
A firm sometime holds cash to take advantage of unexpected
opportunities.
4. Compensating motive
It is a motive for holding cash to compensate bank for providing
services or loans.
Factors determining the cash level or cash needs
1. Credit policy
2. Distribution channel
3. Nature of the product
4. Size and area of the operation.
5. Cash cycle.
Cash Management
It is a process of managing cash inflows and cash outflows.
Scope / Functions of cash management
1. Cash planning.
2. Managing cash flows.
3. Managing optimum cash balance.
4. Investing cash.
5. Maintaining relations with bank.
Lock box system
It is a system of speedy collection of cash from debtors. It reduces
mail time delay.
Inventory
It is the raw material used to produce goods as well as the goods that
are available for sale.
Inventory management
It simply refers to management of inventory. It includes acquisition,
storage and uses of materials.
Objectives of inventory management
1. To ensure availability of inventories.
2. To minimise investment fund in the inventories.
3. To minimise cost of ordering and carrying.
4. To maximise profitability.
5. To avoid over stocking of inventories.
6. To avoid under stocking of inventories.
7. To minimise loss on account of obsolescence, wastage etc.
Techniques of inventory management
1. EOQ
The quantity of material to be ordered at one time is known as
economic order quantity.
2. ABC analysis
It is an inventory management technique that determine value of
inventory items based on their importance to business.
3. VED analysis
It is an inventory management technique that classifies inventory
based on its functional importance.
4. JIT (Just In Time)
It is an inventory management method whereby labour, material and
goods are scheduled to arrive exactly when needed in the
manufacturing process.
5. Reordering level
It is that point of level of stock of a material where the storekeeper
starts the process of initiating purchase requisition for fresh supplies
of that materials.
6. Safety lock level
It is also known as minimum level. It is the minimum quantity of
material which must be maintained in hand at all times.
Maximum level
It is the maximum of stock which should be held in stock at any
period of year
Danger level
It is a level of stock at which normal issue of materials are stopped
and issues are made only under specific instructions.
7. Perpetual Inventory system
A system of records maintained by the controlling departments
which reflects the physical movements of stock and their current
balance.
Receivables
Receivables are the debts owed to the company. It is also known as
accounts receivables or trade receivables.
Receivables Management
It refers to planning and control of receivables of a firm.
Objectives of receivables management
1. To increase sales.
2. To increase profitability.
3. To increase market share.
4. To increase customer base.
5. To evaluate and control receivables.

Factors affecting size of receivables

1. Credit policy.
2. Credit terms.
3. Nature of business.
4. Stability of sales.
5. Cost of receivables.
6. Collection policy.
7. Quality of customers.

This is just a theory short notes from all the modules. You all need to
focus on problem section well while preparing for the exams

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