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Title: Overtrading indicators and solutions
Description: This note describe Overtrading indicators and solutions
Description: This note describe Overtrading indicators and solutions
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Overtrading indicators and solutions
What is overtrading situation?
Overtrading arises when a company attempts to expand too rapidly without
sufficient long-term capital
...
The indicators of overtrading are as follows
...
(b) The volume of current assets, and possibly non-current assets,
experiences a rapid increase
...
(c) There is only a marginal increase in proprietors' capital, primarily
through retained profits
...
(ii) A bank overdraft, which often reaches or even surpasses the limit set by
the bank
...
(i) The proportion of total assets financed by proprietors' capital decreases,
while the proportion financed by credit increases
...
(iii) The business may face a liquidity deficit, meaning that current liabilities
exceed current assets
...
Appropriate solutions to address this problem of overtrading
...
(b) Improved control could be implemented for inventories and accounts
receivable
...
Title: Overtrading indicators and solutions
Description: This note describe Overtrading indicators and solutions
Description: This note describe Overtrading indicators and solutions