Naslov
MANAGEMENT OF CURRENT ASSETS

Autori
Kontuš, Eleonora

Izvornik
International Journal of Sales, Retailing and Marketing (2045-810X) 1 (2012), 3; 125-132

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
cash balance, lockbox system, accounts receivable, inventory level, net savings

Sažetak
The aim of the paper is, firstly, to analyze various types of current assets: cash, accounts receivable and inventory as well as their management, secondly, to explore cost and benefits of cash management, changes in credit policy and changes in inventory policy, thirdly, to determine variables that impact on net savings which can result in the establishment of a lock box system in order to reduce investment in cash, net earnings from changes in credit policy as well as variables that determine net savings from changes in the inventory level. Through proper management of current assets, a maximum return at an acceptable level of risk can be achieved. Emphasis should be placed on a balanced mixture of current asset items. In streamlining its cash operations, the firm should bear the expense of implemented techniques for reducing cash balance requirements as long as marginal returns exceed marginal costs. When a firm is considering changes in its credit policy in order to improve its income, incremental profitability must be compared with the cost of discount and the opportunity cost associated with higher investment in accounts receivable. An optimal inventory level should be based on consideration of incremental profitability resulting from increased merchandise with the opportunity cost of carrying higher inventory balances. The results of the work will provide equations for calculating net savings of establishing a lock box system, equations for calculating net earnings from changes in credit policy and net savings from revising the inventory policy. The results lead to the conclusion that management of current assets is easier as calculations regarding net savings from establishing a lock box system, net earnings from investment in accounts receivable and net savings from different inventory levels are simplified by using the given equations.

Izvorni jezik
Engleski

POVEZANOST RADA