Intro to Business › Section P · Financial management and securities markets › Topic P.2
How organizations use funds
A firm spends money in two broad ways: on the day-to-day running of the business and on long-lived assets that pay off for years. Managing the first keeps the firm able to pay its bills; choosing the second shapes its future.
In this topic
- Two kinds of spending
- Short-term spending and current assets
- Managing cash
- Three ways to speed up cash
- Accounts receivable
- Inventory
- Worked example: Larchmont's cash conversion cycle
- Worked example: what faster collection is worth
- Long-term expenditures
- Common mistakes to avoid
- Key takeaways
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