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Opentuition: wic management: aggresive wic management means always overtrading? Because the explainations are almost similiar.
Aggresive when some of permanent and all of flactuating wic financed by Short term sources.
Overtrading is when even permanent wic financed by expensive short term finance.(OT REVISION NOTES)
2) question 2) it says above short term finance is expensive, but we in some booms it says that long term is safe but expensive, short term is cheap but risky. Which one is true??
Nowhere on this website do I say what you have written!!
Overtrading is where a company is forced into being overdrawn – because they had not planned properly. Not because that was their policy.
What policy a company follows with regards to financing their working capital is their choice. Aggressive is where their policy is to use more short-term finance. Conservative is when their policy it to use more long-term finance.
Nowhere do I say that short-term finance is more expensive.
The interest rate on short-term finance is often higher, but with overdrafts you are only paying interest on what you borrow from day-to-day.
With long-term finance, the interest rate is likely to be lower, but you are paying the interest whether or not you actually need the borrowing from day-to-day.
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