Question

List five potential cash sources?

Answer 1

In a company if we Cosider the potential cash sources, we have the followings:

1. By Increasing the Equity - By bringing out IPO or FPO, a company generally raise their cash sources. It is a very good way of increasing the cash but not increasing any fixed percentage off debt burden.

2. By Increasing the Long term debt- By taking long term debts like issue of debenture, public deposits, loan from banks and Public financial institution is the another way of cash sources for the company.

3. By increasing the Current liabilities: Deffering some Expenditure or Payments, is also said as savings cash today. A Company can obtain Credit for short term to deffer their immediate payment and save the Cash outflow.

4. By Disposing of the Fixed Asset: A company can sell their fixed asset or any Investment, to increase their potential cash sources.

5. By Selling the Current asset other then cash: A company can sell their Inventory to generate potential cash sources.

(Tips to remember this: Think about the balance sheet. Liabilities side Increase, my cash increase & Asset side decrease other then cash, my cash increase. Keeping this in mind you can create various other cash sources such as Factoring the trade debtors, Discounting Bills receivable, reedeeming the Deposits etc)