清华大学公司财务讲义2.ppt

* chapter11 working capital management(I) * Figure 16.5 * chapter11 working capital management(I) * Temporary, Permanent, and Spontaneous Sources of Financing Temporary sources of financing unsecured bank loans, secured loans (use accounts receivable and inventories as collateral ) commercial paper, etc. * chapter11 working capital management(I) * Temporary, Permanent, and Spontaneous Sources of Financing (continued) Permanent sources of financing include: intermediate-term loans and long-term debt preferred stock, and common equity. Spontaneous sources of financing wage and salaries payable accrued interest and accrued taxes Trade credit * chapter11 working capital management(I) * How to Make Choice There is no absolute advantages one alternative over the others theoretically. Two practical observations are most of financial managers attempt to match maturates of asset and liabilities most of financial managers like to make permanent investment in net working capital. * chapter11 working capital management(I) * Advantages and Disadvantages of Current Liabilities Advantages Current liabilities offer the firm a flexibility source of financing. It can be used to match the time of a firm’s needs for short-term financing. Interest cost is lower when the firm use short-term financing rather than long-term financing. * chapter11 working capital management(I) * Advantages and Disadvantages of Current Liabilities (continued) Disadvantages First, short-term debt must be repaid or rolled over more often, and so it increase the possibility that the firm’s financial condition might deteriorate to a point where the needed funds might not be available. A second disadvantage of short-term debt is the uncertainty of interest costs from year to year. * chapter11 working capital management(I) * Thank you for your attention! * This is similar to the example in the book, just with a different number of zeros. * Note that we are assuming that all sales are credit sales. S