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Strategic Financial Planning and Control

S/E/233. Discuss the relative importance of profitability and liquidity for the survival of a business with particular reference to capital control.

WORDS:: 4350
DATE:: 2010
PRICE:: 49.99 GBP

The essay identifies that most companies are likely to face liquidity problems in their start -up periods (the short run) and hence face an inability to continue operation. However, an infant organisation may try to remain in business, even if it is not making profit, by obtaining an increased overdraft facility, negotiating a longer credit period with suppliers and encouraging debtors to pay faster. It is suggested that a business is unlikely to survive without a combination of: new capital from shareholders, better control of working capital and the building up of an adequate capital base through retained profits.

KEYWORDS: Business, profit and loss, profitability, liquidity, liquidation, capital control, assets, shareholders, financial management,