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Working Capital Management at Kirloskar Pneumatics Co. Ltd. by Rajesh Menon

Working Capital Management at Kirloskar Pneumatics Co. Ltd. by Rajesh Menon

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Published by Bandya Berozgaar

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Published by: Bandya Berozgaar on Jan 18, 2012
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01/18/2012

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It refers to the desire of the firm to take advantage of opportunities which

present themselves at unexpected moment & which are typically outside

the normal course of business. If the precautionary motive is defensive in

nature, in that firms must make provisions to tide over unexpected

contingencies, the speculative motive represents a positive and aggressive

approach. The speculative motive helps to take advantages of:

An opportunity to purchase raw material at reduced price on payment

of immediate cash.

A chance to speculate on interest rate movements by buying securities

when interest rates are expected to decline.

Make purchases at favorable price.

Delay purchase of raw material on the anticipation of decline in prices.

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