Financial Management Questions Essay

Question 1 Medwig Corporation has a DSO of 17 days. The high society averages $3500 in credit sales each day. What is the companys average accounts receivable? Answer / SolutionAccounts receivable = Days Sales Outstanding * (Sales / Days) = 17 * (3500/1) = $59,500Question 2 deal some(prenominal) of the techniques available to reduce risk of infection exposures? Answer Insurance is champion of the simplest and most available ways to reduce exposure to risk. It involves the transfer of risk to another company. Depending on the amount and nature of the risk convoluted, risk memory board by self-insurance powerfulness not be a practical option, oddly if the cost of transferring the risk (insurance premiums) is reasonable enough to not add momentous costs. Risk transfer is not done always through insurance, however.Outsourcing some operations to a company who agrees to take on the risk involved is another type of risk reduction. Some tasks are best accommodate for specialize d companies, and large organizations might outsource such activities as customer support, software development and internal security.Derivative hedging is also an option, depending on the nature of the company. Futures contracts, for example, reduce the risk of price fluctuations in a finical commodity, and are very useful to transfer it to a speculator. A company producing commodities would benefit from this type of hedge. Aside from transferring risks, a company might feat to reduce risk by reducing the inherent cause of the risk. instead of hiring a single custodian for cash transfers, a company might hire another one to reduce the risk of employee theft. The last mode is to avoid the risk completely. This will completely circumvent possible losses, hardly it also precludes any possible gains from taking on the risk.