Page 371 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Shortt term finnance and investments

Shoort term finaance

Current liabilities should not be alloweed to increaase to a level where the cash pposition
and liquuidity of the companyy are at rissk. This requires careeful managgement of short
term finnance:

The maain sourcess of short tterm fundinng are as ffollows.

F Factoring/ Bannk overdraft FFinancing
invoice
Tradde payablees discountingg A Advantagess exports
Addvantagess AAdvantagess
Addvantagess Flexible &
Easyy to arrangge u unsecured UUsful whenn
Cost savingg sellling goods or
servces
Disaadvantagees Dissadvantages overseas

Suupply stopss Disaadvantagees E Expensive
E Expensive
Increeased pricees Reepayable oon Dissadvantagges
C Customer demand
p perception Complex.

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