Short-Term Finance and Planning参考.ppt

Chapter Outline 27.1 Tracing Cash and Net Working Capital 27.2 Defining Cash in Terms of Other Elements 27.3 The Operating Cycle and the Cash Cycle 27.4 Some Aspects of Short-Term Financial Policy 27.5 Cash Budgeting 27.6 The Short-Term Financial Plan 27.7 Summary Conclusions Executive Summary We are solidly in to the third great question of corporate finance. The Balance-Sheet Model of the Firm The Balance-Sheet Model of the Firm The Balance-Sheet Model of the Firm 27.1 Tracing Cash and Net Working Capital Current Assets are cash and other assets that are expected to be converted to cash with the year. Cash Marketable securities Accounts receivable Inventory Current Liabilities are obligations that are expected to require cash payment within the year. Accounts payable Accrued wages Taxes 27.2 Defining Cash in Terms of Other Elements 27.2 Defining Cash in Terms of Other Elements An increase in long-term debt and or equity leads to an increase in cash—as does a decrease in fixed assets or a decrease in the non-cash components of net working capital. The Sources and Uses of Cash Statement follows from this reasoning. 27.3 The Operating Cycle and the Cash Cycle 27.3 The Operating Cycle and the Cash Cycle In practice, the inventory period, the accounts receivable period, and the accounts payable period are measured by days in inventory, days in receivables and days in payables. 27.4 Some Aspects of Short-Term Financial Policy There are two elements of the policy that a firm adopts for short-term finance. The Size of the Firm’s Investment in Current Assets Usually measured relative to the firm’s level of total operating revenues. Flexible Restrictive Alternative Financing Policies for Current Assets Usually measured as the proportion of short-term debt to long-term debt. Flexible Restrictive The Size of the Investment in Current Assets A flexible policy short-term finance policy would maintain a high ratio of current assets to sales. Keeping large cash balances and in