1. To ensure regular supply of raw materials – smooth running of production process.
  2. Timely payment of wages and salaries – improving morale and efficiency of employees.
  3. For efficient use of fixed assets.
  4. To make payments to creditors on time – maintain reputation – improve goodwill
  5. Helps to avoid the possibility of under capitalization.
  6. To pay dividend and interest on time – improve confidence of investors
  7. Easy loans from financial institutions
  8. Ability to face crisis
  9. Exploitation of favourable market conditions.
  10. Helps to avail cash discount from suppliers.

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