Question 1
a. Discuss the factors that are likely to influence the desiredlevel of cash of a company (5
marks)
b. Outline the advantages and disadvantages of using short termdebt, as opposed to long
term debt, in the financing of working capital
c. Why cash flows rather than profits are most desirable infinancial management? (5
marks)
d. Explain the term “agency relationships” and discuss theconflicts that might exist in the
relationship between’
i) Shareholder and managers
ii) Shareholders and creditors
What steps may be taken to overcome these conflicts?
