The manager's problem in a nutshell
In order for a company to survive in a market economy it should both maintain a sufficient liquidity to meet its financial obligations and be able to reach a level of profitability which satisfies the owners' demand for return on invested capital.
It is the task of the company management to make sure that these two basic requirements are met.
Typical issues of concern
· What line of products are most profitable?· How are sales revenues affected by changed selling prices and how are costs affected by volume changes and by changes in purchase prices? · What connections are there between increased terms of credit, sales revenues and the liquidity of the company? · What are the connections between the size of capital formation and the company's profitability? · What capital investments satisfy the required profitability? · How can different fields of activity be managed and evaluated?
Knowledge provided by the course