• Overtrading
    WHAT IS OVERTRADING? Overtrading means a situation of operating a business with insufficient long term capital to support the current volume of business. A situation in which a company is growing its sales faster than it can finance them. Overtrading often occurs when companies expand their own...
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  • Working Capital Mangement
     investment in working capital will  increase.  What is OvertradingOvertrading is the term applied to a company which rapidly increase its turnover without having  sufficient capital backing. Overtrading is risky because short‐term finance can be withdrawn relatively  quickly if creditors lose...
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  • Dsfsgre
    offer, chasing late payment  Trade payable: is less flexible as it depends on the suppliers. Late payment runs the risk of paying interest on overdue accounts, losing suppliers or being refused credit in the future  OVERTRADING Overtrading occurs when business is trying to support too large a...
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  • Working Capital Management
    hand increases the reserves position, thereby acting as a source of working capital- Thus working capital gets affected by the dividend policies. Level of taxes When tax is more, more cash would be required to pay for it and therefore more working capital would be required. Overtrading and...
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  • Working Capital
    ™  www.tutor2u.net  Danger of Overtrading  Overtrading happens when a  business tries to do too much, too  quickly with too little long­term  capital  Warning: a profitable business can  fail if it runs out of cash tutor2u™  www.tutor2u.net  Overtrading ­ Introduction...
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  • M2 unit 38
    Overtrading: Overtrading takes place when a business accepts work and tries to complete it, but finds that it requires greater resources to complete it. It is also when the production cycle is too long. KEN enterprise is overtrading as they have employed extra staff in June and December...
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  • course notes
      outstanding balances by the year­end  •  Ratios concern the past (historic) not the future  •  Working capital management is very much about  ensuring the business has sufficient cash in the future tutor2u™  www.tutor2u.net  Danger of Overtrading  Overtrading happens when a  business tries...
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  • Student
    higher expansion, soon it will be on verge of collapse. In 2009 company can grow upto 1.942%. Overtrading: Sui-Northern Gas Pipeline Limited | 2009 | 2008 | 1.Stock in Days 365/168,933831,000÷783,362,000=1.69 days | 365/124,155,031,000÷525,37000=1.54 days | 2.Debtor Collection Period365...
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  • Sources of Finance
    ; Overtrading Overtrading tends to happen in a business which is growing rapidly. Sometimes an entrepreneur will be too keen to chase the new business and handle more work than is expected. Pushing the business can be a good thing thought sometimes this will result in unnecessary problems which could...
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  • Business Studies Growth
    themselves or 'overtrading'. The problem with overtrading is that if you try and produce too much you can only continue to be successful if your goods sell, and also bring in quick cash payment. Unfortunately, in the real world you will find that times arise when debtors are slow in paying up and...
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  • Tesco Main Barriers, Gap Analysis
    TABLE OF CONTENTS INTRODUCTION 2 FINANCIAL RATIOS 4 PROFITABILITY RATIOS 5 LIQUIDITY RATIOS 7 ACTIVITY RATIOS 9 INVESTMENT RATIOS 11 OVERTRADING 13 FINANCIAL STATEMENTS 14 BALANCE SHEET 15 FORMATS OF FINANCIAL STATEMENTS 18 CONCLUSION 22 BIBLIOGRAPHY 23...
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  • Acc 2525
    working capital management can lead to over-capitalization and overtrading. Over-capitalization is when there are excessive stocks, debtors, cash; low return on investments and long-term funds tied up in non-earning short term assets. Overtrading leads to growing debtors and creditors, and if unchecked...
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  • Argenti Trajectories
    accept advice 3. Fast growth due to energy & ability of entrepreneur 4. Sales grow; firm need additional capital injections 5. Margins do not fall due to owner’s persuasiveness; overtrading 6. More credit is offered by financial institutions 7. Credit offered by unscrupulous creditor who sells out 8...
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  • Marketing
    | | | | | | |2.2 explain the importance of|Estimate average working capital |4(e) |P.21,22,23,24 | | | |financial planning |Explain overtrading |4(f...
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  • New Microsoft
    ). Third, the boom leads to speculation that initially has positive feedback; speculators earn money and invest more as well as making more people invest. This leads to what Adam Smith calls "overtrading" which can be caused by pure speculation (buying something with the aim of selling it later at a...
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  • Working Capital Management
    saving of some interest costs but it can prove very costly to the firm in the form of loss credit in the market. The finance manager has, therefore, to ensure that the payments after obtaining the best credit terms possible. Overtrading and undertrading The concepts of overtrading and...
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  • Assignment
    could indicate that the volume of inventories or receivables is very high. * Short period of credit taken from suppliers might indicate the volume of payables is too low c) Overtrading occurs when a business is conducting its business operations with inadequate capital. It is also known as under...
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  • Financial Ratio Analysis
    revenues, increase in inventory in relation to revenue, uneven increase in receivables and increase in accounts payable period and decrease in profit margin are the symptoms of “Overtrading”. In line with the decrease in net profit, earning per share has also drastically reduced to Rs.3.22 (2010...
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  • Professional Personal Developement
    Efficiency Ratios Efficiency ratios measure the quality of a business' receivables and how efficiently it uses and controls its assets, how effectively the firm is paying suppliers, and whether the business is overtrading or under trading on its equity (using borrowed funds). D&B uses five key...
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  • Corporate finance final tips
    inventory, higher GP, Higher NP , higher EPS b. Receivable b.i. Credit control b.ii. Credit worthiness b.iii. Early settle discount b.iv. Factoring 5. Using or not using wacc a. Scalar b. Risk profile = business risk of company c. Capital structure 6. Overtrading a. Increase in sales b...
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