What general cost trade-offs are associated with the firms level of short- term financing? How do these costs behave when a firm substitutes short-term financing for long- term financing? How would you quantitatively model this decision to find the optimal level of short-term financing?
Answer to relevant QuestionsHow might the financial manager’s view of inventory differ from that of managers in production and marketing? What is the relationship between inventory turnover and inventory investment? Explain. If a firm were contemplating increasing the cash discount it offers its credit customers for early payment, what key variables would need to be considered when quantitatively analyzing this decision? How do the variables ...Why are providing liquidity and preserving principal the primary concerns in choosing short-term in-vestments? What guidelines should be included in a short- term investment policy? How can the cash manager model the benefits and costs of various funds transfer mechanisms to assess their economics? How can this analysis be used to determine the minimum transfer amount? Why is it not surprising to find that the risk premium on the world market portfolio is lower than the domestic risk premium?
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