534 Financial Management

Question 1Medwig Corporation has a DSO of 17 days . The play along averages 3500 in credit sales each day . What is the order s average account s receivableAnswer / Solution Accounts Receivable Days gross sales Outstanding (Sales / Days 17 (3500 /1 59 ,500Question 2Discuss whatever(prenominal) of the techniques open to reduce essay exposuresAnswerInsurance is one of the simplest and most available ways to reduce exposure to take chances . It involves the transfer of risk to a nonher troupe Depending on the amount and nature of the risk involved , risk retention by self-insurance tycoon not be a practical option , especially if the follow of transferring the risk (insurance premiums ) is reasonable enough to not add monumental costs . Risk transfer is not done continuously through insurance , howeverOutsourcing some operations to a company who agrees to take on the risk involved is another fashion model of risk reduction .

Some tasks are best desirable for specialized companies , and large organizations might outsource such activities as customer support , software development and internal securityDerivative hedging is also an option , depending on the nature of the company . Futures contracts , for example , reduce the risk of price fluctuations in a special(a) commodity , and are very useful to transfer it to a speculator . A company producing commodities would benefit from this type of hedgeAside from transferring risks , a company might try to reduce risk by reducing the inherent cause of the risk . Instead of hiring a single custodian for cash transfers , a company might hire another one to reduce the risk of employee theftThe locomote method is to avoid the risk all in all . This will completely circumvent possible losses , but it also precludes any possible gains from taking on the riskPAGEPAGE 2...If you want to get a full essay, order it on our website: Orderessay

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