They may buy from either U.K or South America depending upon the option which will help them to increase the cash flow.
Profit is generated from the sales figure and the purchase figure taking the expenses into consideration. It may be operating or non-operating expenses in nature. We consider both cash sales and credit sales for the particular period and purchases both in cash and credit. But expenses are deducted which are made only during that particular period and not which are advance in nature.
The sources available for financing are basically internal sources and external sources. Internal sources are those from where we can get finance like that of the equity option for raising funds from the equity holders or issuing new equity shares to existing or new prospects.
Since, Hidetoseek Ltd’s old supplier is in U.K. a mutual trust and a relationship is well build up. Now if they switch over to South America the company needs to build the same relationship and trust but it will require a lot of time to adjust. But looking at the current position of the company’s cash flow statement it is not wise enough to go for new relationship as cost is associated with it.
New terms with new supplier regarding the credit facility, credit period, cash discount, trade discount may create a problem for the management in operating. Present situation of cash flow is not good and taking such risk might adversely impact on managing cash.The work culture, perception of the new suppliers towards the company need to be analyzed and build a relationship according to it which requires considerable time
New set up for transportation needs cash which will ultimately effect the cash flow statement which is not in a good position. Delivery on time may get affected as new suppliers may not understand the importance of Just-in-Time delivery concept. The question of quality may be in danger. Quality control is very important ...
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(Introduction to Accounting and Finance -- Economics, Finance and Assignment - 4)
“Introduction to Accounting and Finance -- Economics, Finance and Assignment - 4”, n.d. https://studentshare.net/miscellaneous/402956-introduction-to-accounting-and-finance-economics-finance-and-management.
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