Question
hi, how are you? Im doing a business homework. I dont understand what exactly liquidity is. If you can hep me it will be awsome.
hi, how are you? Im doing a business homework. I dont understand what exactly liquidity is. If you can hep me it will be awsome.
David Cottam has recently received his license to set up a stationery outlet, Cottam Stationers. His main clients would be from the business sector, such as schools and offices. He plans to commence trading on 1 August and has initial capital of $6,500, which he puts into a business bank account. In preparing for his business, David Cottam has gathered the following information: Sales for the first four months are forecast to be: $2,000 (Aug), $5,500 (Sep), $3,200 (Oct) and $3,000 (Nov). Stock purchases are expected to cost exactly half the value of sales each month. Rent is paid every two months, starting in September. Each payment is $2,000. Utility bills are predicted to average $500 per month. Other expenses are predicted to be $1,800 for the first month and $1,100 per month thereafter.
a) Comment on the liquidity position of the firm.
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