Types of Risk – Systematic Risk


Systematic Risk. There are a number of risks a business organization is exposed to, like ‘Market Risk’, ‘Interest Rate Risk’, ‘Country Risk’, ‘Business Risk’, ‘Financial Risk’, etc. They can be put under two broad categories: Systematic Risk The risk, which is inherent to the entire market or system, is termed a ‘Systematic Risk’ or ‘Uncontrollable … Read more

Types/Classification of Cost

Types and classifications of cost. The cost may be classified as follows: 1) Future cost versus historical cost: Future costs are the basis on which financial decisions are taken. although they are only projections of what may or may not happen in the future, they are more important as compared to the historical cost, which … Read more

Modigliani and Miller (MM) Model

Participants in the Indian Money Market.

Modigliani and Miller (MM) Model. The genesis of the Dividend Irrelevance Theory of Modigliani and Miller may be traced back to the “Capital Irrelevance Model’ advocated by them in a paper published in 1958. Under the above model, a was held that the capital structure of a company has no relevance as far as its … Read more

Determinants of Working Capital

The level of working capital requirements of a company is determined by the following factors 1) Nature of Business: The nature of a company’s business is the prime determinant of its working capital requirements. Businesses of small size, especially those engaged in trading of goods, need a high level of working capital to fulfill their … Read more

Motives for Holding Cash

Motives for Holding Cash

Motives for Holding Cash. One of the most important constituents of current assets is “cash.” It is required to carry out all the activities of the business. A business should have enough cash on hand to pay its bills right now and in the future. Cash, being totally unproductive by nature, should be kept at … Read more

Investing Surplus Cash

Participants in the Indian Money Market.

Investing Surplus Cash. Surplus cash that is not required in the short run should be invested in liquid assets, Le.. marketable securities, or other securities that can be instantly converted into cash when required. Cash itself is an unproductive asset, and keeping it in the same form will not benefit the firm. Rather, it has … Read more

Controlling Cash Outflows

Participants in the Indian Money Market.

Controlling cash outflows. Just as the basic rule for increasing cash inflows is to increase collection speed, the basic rule for decreasing cash outflows is to slow down the payment process. For this, a centralized payment system may be adopted, just as a decentralized collection system was adopted in the case of receivables. A reasonable … Read more

Factors Affecting Investment in Receivables

Factors Affecting Investment in Receivables the Size of Eowing are some of the factors that directly or indirectly affect the size of the receivables: 1) Size of Credit Sales: The major factor affecting the size of the receivable is the volume of the credit sales. Receivables have a direct relation to the credit sales. As … Read more