WORKING CAPITAL

System

I've trying to work out the advantages and dis-advantages in improving Working Capital. I've got a list below with different options on a short basis. I can't see the advantages and dis-advantages for them.<BR><BR>1. Increase the stock levels to be paid for by selling fixed assets.<BR>2. Increase credit sales, so that debtors during the next year.<BR>3. Borrow from the companyâ??s bank, on a long-term loan.<BR>4. Delay paying the taxation liability.<BR>5. Sell ordinary shares to existing shareholders.<BR><BR>Does anyone know the advantages and disadvantages for them?<BR>If anyone does please let me know either here or email me at andrewlau2003@hotmail.com<BR><BR>Thanks!!<BR><BR>Andy

System

WORKING CAPITAL

Hello<BR><BR>Some advantages and disadvantages, to give you an idea:<BR><BR>1. Increase in stocks<BR>Adv: Improved customer relationships<BR> Increase in sales<BR>Disadv: Increased stock holding costs<BR> Working capital funding increased<BR><BR>2. Increase debtors<BR>Similar to above but instead of increased stock holding costs, there may be an increased risk of bad debts<BR><BR>3. Long-Term loans<BR>Adv: Termly payments - for ease of cash flow forecasting<BR> Interest is tax deductable<BR> Cheaper than equity issue<BR>Disadv: Inflexible<BR> Will affect gearing<BR><BR>4. Delay Tax<BR>Adv: Will ease short-term cash flow deficit<BR>Disadv: Penalties will be imposed by Inland Revenue<BR><BR>5. Rights issue - increase in equity<BR>Adv: Gearing will be unaffected<BR>Disadv: Expensive<BR> Control of company can be altered<BR><BR>There are more but I hope the above helps.<BR><BR>