文档介绍：Chapter 21 Working Capital Management
Chapter 21
Working Capital Management
Chapter Outline
Cash Management: Collection, Disbursement, and Investment
Credit and Receivables
Inventory Management
Inventory Management Techniques
Reasons for Holding Cash
Speculative motive – hold cash to take advantage of unexpected opportunities
Precautionary motive – hold cash in case of emergencies
Transaction motive – hold cash to pay the day-to-day bills
Trade-off between opportunity cost of holding cash relative to the transaction cost of converting marketable securities to cash for transactions
Cash Collection
Payment Payment Payment Cash
Mailed Received Deposited Available
Mailing Time
Processing Delay
Availability Delay
Collection Delay
One of the goals of float management is to try to reduce the collection delay3>. There are several techniques that can reduce various parts of the delay.
Cash Disbursements
Slowing down payments can increase disbursement float – but it may not be ethical or optimal to do this
Controlling disbursements
Zero-balance account
Controlled disbursement account
Investing Cash
Money market – financial instruments with an original maturity of one year or less
Temporary Cash Surpluses
Seasonal or cyclical activities – buy marketable securities with seasonal surpluses; convert securities back to cash when deficits occur
Planned or possible expenditures – accumulate marketable securities in anticipation of ing expenses
Figure
Characteristics of Short-Term Securities
Maturity – firms often limit the maturity of short-term investments to 90 days to avoid loss of principal due to changing interest rates
Default risk – avoid investing in marketable securities with significant default risk
Marketability – ease of converting to cash
Taxability – consider different tax characteristics when making a decision
Credit Management: Key Issues
Granting credit increases sales
Costs of granting credit
Chance that customers won’t