Financial Markets and Bank Management Coursework - 1

Financial Markets and Bank Management - Coursework ExampleThe order sells second-hand clothes in the African markets. smash Gauche plans to explore a new market opportunity in Asia. The company plans to meet the demand in the new market by importing more clothes from Germany. Rive Gauche Ltd seeks for workings outstanding funding through overdraft. The facts point that the company prefers meeting the shortage in its working corking by seeking for short-term sources of funds (bank overdraft). On that note, the current overdraft of the company stands at 90,000. The management plans to increase the overdraft level to 400,000, which is an increase by 310,000. In other words, the company is seeking for a loan worth 310,000 to meet its working capital needs as it explores the new market. Working capital is arrived at by the following formula working capital = (current assets current liabilities). The company relies on its working capital to meet current obligations and run the da y-to-day operations. Therefore, is advisable for managers to formulate and implement more expeditious working capital management strategies. The primary reason behind the most effective strategy is to suss out the constant availability of sufficient levels of working capital. Rive Gauche Ltd.s current assets are (stock + debts + cash) = (311,000 + 208,000 + 40,000) = 559,000. On the other hand, the current liabilities are (creditors + other liabilities) = (200,000 + 200,000) = 400,000. Based on the working capital formula, the companys working capital = (559,000 400,000) = 159,000. The estimation states that Rive Gauche Ltd currently has 159,000 to meet its current obligations. The analysis intelligibly shows that working capital is not sufficient to cover the current obligations. Therefore, the companys working capital requirement is determined as follows working capital requirement = (current liability working capital) = (400,000 159,000) = 241,000 (Bhattacharya 2009, p p).