The most comprehensive picture of a firm's liquidity is obtained by examining its cash budget, which forecast a firm's cash inflows and outflows, thus focuses on what really counts, the firm's ability to generate sufficient cash inflows to meet its required cash outflows.

Day sales outstanding is the average length of time required to convert the firm's receivable into cash

The restricted current asset investment policy offers the lowest expected return coupled with the lowest risk.

Compensating balances are held to enable the firm to take advantage of bargain purchases

The just in time (JIT) system requires the component parts to be perfect and coordinates a manufacturer's production with suppliers' production so that raw materials arrive from suppliers just as they are needed in the production process.

Financing with short term credit usually results in higher interest cost

Lengthening the credit period as well as expanding sales and purchases generates additional financing

Accrued liabilities are "free" in the sense that no interest must be paid on these funds.

Self-liquidating approach matches assets and liability maturities, defined as using permanent financing to finance permanent current assets and fixed assets, and use short term financing to cover temporary assets.

Net working capital is defines as current assets divided by current liabilities

Lockbox arrangements are one way for a firm to speed up its collections of payments from customers

The aging schedule is a commonly used method of monitoring receivables

Offering trade discounts is costly to a firm and as a result, firms that offer trade discounts are usually that those that are performing poorly and need cash quickly

Firms today are more likely to rely on cash than on reserves borrowing power or marketable securities for speculative purposes

Offering cash discounts can positively impact a company's cash flow by encouraging quicker payments from customers, thereby accelerating the inflow of cash and reducing the need for extended credit terms.

A conservative financing approach to working capital will result in all permanent assets being financed using long term securities

Short term loans generally obtained faster than long term loans because when lenders consider long term loans they insist on a more through evaluations of the borrower's financial health and because the loan agreement is more complex

Perpetual inventory system often utilizes technology such as barcode scanners, RFID (Radio-Frequency Identification) tags, or inventory management software to automate the tracking process which provide immediate update on stock quantities.

Two bin method could potentially refer to a method where inventory levels are visually marked or flagged with a "red line" to indicate a critical threshold point. This red line acts as a signal that triggers reordering or restocking when inventory drops below that designated level.

Financial management is a process to ensure that financial resources are obtained & used profitably and effectively to accomplish the firm's objective.

The assets management decision explains how assets have been acquired and must be managed efficiently to help the firm maximize risk and return.

In Malaysia, money market consists of primary market and secondary market.

The purpose of maintaining raw materials inventory is to incorporate between purchasing and production of the business.

The Inflation risk will increase the purchasing power on financial instruments.

Credit term of 5/15 net 35 indicate 5% discount if payment made within 15 days and last discount to claim is on day 35.

Cash discount given to encourage customer to buy in bulk.

An aggressive working capital policy would have low liquidity, higher risk, and higher profitability potential.

Working capital is composed of firm's current assets and non- current assets.

Collateral is one of the criteria in the process of credit selection for customers who purchase in small monetary amounts.