When Implementing Cash Management Strategies, a Firm Should Take Care

question 245

True/False

When implementing cash management strategies, a firm should take care to avoid having a large number of inventory stock-outs, to avoid losing the use of its cash by collecting its accounts receivable using high-pressure collection techniques, and to avoid damaging the firm's credit rating by overstretching accounts payable.

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Definitions:

Planning Budget

A budget created for a specific level of activity, used as a tool for decision making and planning within an organization.

Supplies Cost

The amount spent on materials and goods required for the operation of a business that are not directly included in the final product.

Spending Variance

The difference between the actual and budgeted spending. It is used in budgetary control to identify discrepancies and manage costs.

Travel Expenses

Costs associated with traveling for the purpose of conducting business-related activities.