Acc1130

Retained earnings be the portion of net income that is unbroken rather than distributed as dividends to sh arholders. Companies do not hold to growth alternative sources of finance by reinvesting the kept up(p) earnings so it is a major source of finance. Retained earnings be an immediate fund avail up to(p) and the friendship does not need the permission of other parties to work it. However a partnership who has large retained earnings, no cash in the beach and a large overdraft will not be able to finance investment from these retained earnings. Tighter extension curb: Companies should dash steps to ensure that customers keep their extension learn and legal injury of trade. In coiffure to encourage barrack openment, invoices and statements should be cautiously checked for accuracy and despatched promptly. Customers who have exceeded their credit limits should not be able to obtain goods. But by exerting a tighter credit control over trade debtors, it is realistic for companies to reduce their assets. When debtors return faster, the liquidity of the go with will increase as on that point will be much than money to use.

Rather than development external sources of finance much(prenominal) as bank overdraft, debt cypher or invoice discounting, the company stick out make the debtors pay faster and get money without having any expenses to incur. Reducing computer memory levels: if a company has a proportion of its assets in the cast of characters of stock, there is an chance cost as property are being laced up and cannot be used for more juicy opportunit ies. rather of being tied up as stocks that! money can be used to make a more profitable investment. Delaying payment to creditors: By delaying payment to creditors, funds are retained in the company for other purposes. besides companies can use that money for investment and later gathering money once more to back the creditors.If you want to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper