Working Capital Flashcards
1
Q
risks of stock?
A
- holding costs
- obsolescence
- damage
- storage (space)
- stock out
2
Q
risks of receivables?
A
- long wait times
- bad debts
3
Q
risks of payables?
A
- bad rep / relationship with creditors if take too long to pay
- interest
4
Q
risks of cash?
A
- liquidity
- opportunity cost of investing
5
Q
types of costs under EOQ?
A
- holding cost
- ordering cost
(both increase as size of stock order increases)
6
Q
EOQ formula?
A
\/2FS / C
F = fixed cost of ordering
S = sales demand
C = carrying cost per unit
