财务管理基础 沈洪涛课件16

CHAPTER16

FinancingCurrentAssetsWorkingcapitalfinancingpoliciesA/P(tradecredit)CommercialpaperS-TbankloansWorkingcapitalfinancingpoliciesModerate–Matchthematurityoftheassetswiththematurityofthefinancing.Aggressive–Useshort-termfinancingtofinancepermanentassets.Conservative–Usepermanentcapitalforpermanentassetsandtemporaryassets.ModeratefinancingpolicyYearsLowerdashedlinewouldbemoreaggressive.$PermC.A.FixedAssetsTemp.C.A.S-TLoansL-TFin:Stock,Bonds,Spon.C.L.Conservativefinancingpolicy$YearsPermC.A.FixedAssetsMarketablesecuritiesZeroS-TDebtL-TFin:Stock,Bonds,Spon.C.L.Short-termcreditAnydebtscheduledforrepaymentwithinoneyear.Majorsourcesofshort-termcreditAccountspayable(tradecredit)BankloansCommercialloansAccrualsFromthefirm’sperspective,S-TcreditismoreriskythanL-Tdebt.Alwaysarequiredpaymentaroundthecorner.Mayhavetroublerollingoverloans.Advantagesanddisadvantagesofusingshort-termfinancingAdvantagesSpeedFlexibilityLowercostthanlong-termdebtDisadvantagesFluctuatinginterestexpenseFirmmaybeatriskofdefaultasaresultoftemporaryeconomicconditionsAccruedliabilitiesContinuallyrecurringshort-termliabilities,suchasaccruedwagesortaxes.Isthereacosttoaccruedliabilities?Theyarefreeinthesensethatnoexplicitinterestischarged.However,firmshavelittlecontroloverthelevelofaccruedliabilities.Whatistradecredit?Tradecreditiscreditfurnishedbyafirm’ssuppliers.Tradecreditisoftenthelargestsourceofshort-termcredit,especiallyforsmallfirms.Spontaneous,easytoget,butcostcanbehigh.ThecostoftradecreditAfirmbuys$3,000,000net($3,030,303gross)ontermsof1/10,net30.ThefirmcanforegodiscountsandpayonDay40,withoutpenalty. Netdailypurchases=$3,000,000/365 =$8,219.18BreakingdownnetandgrossexpendituresFirmbuysgoodsworth$3,000,000.That’sthecashprice.Theymustpay$30,303moreiftheydon’ttakediscounts.Thinkoftheextra$30,303asafinancingcostsimilartotheinterestonaloan.Wanttocomparethatcostwiththecostofabankloan.BreakingdowntradecreditPayableslevel,ifthefirmtakesdiscountsPayables=$8,219.18(10)=$82,192Payableslevel,ifthefirmtakesnodiscountsPayables=$8,219.18(40)=$328,767Creditbreakdown Totaltradecredit $328,767 Freetradecredit -82,192 Costlytradecredit $246,575NominalcostofcostlytradecreditThefirmloses0.01($3,030,303)

=$30,303ofdiscountstoobtain$246,575inextratradecredit: kNOM =$30,303/$246,575 =0.1229=12.29%The$30,303ispaidthroughouttheyear,sotheeffectivecostofcostlytradecreditishigher.NominaltradecreditcostformulaEffectivecostoftradecreditPeriodicrate=0.01/0.99=1.01%Periods/year=365/(40-10)=12.1667EffectivecostoftradecreditEAR =(1+periodicrate)n–1 =(1.0101)12.1667–1=13.01%Commercialpaper(CP)Short-termnotesissuedbylarge,strongcompanies.B&Bcouldn’tissueCP--it’stoosmall.CPtradesinthemarketatratesjustaboveT-billrate.CPisboughtwithsurpluscashbybanksandothercompanies,thenheldasamarketablesecurityforliquiditypurposes.BankloansThefirmcanborrow$100,000for1yearatan8%nominalrate.Interestmaybesetunderoneofthefollowingscenarios:SimpleannualinterestDiscountinterestDiscountinterestwith10%compensatingbalanceInstallmentloan,add-on,12monthsMustusetheappropriateEARstoevaluatethealternativeloantermsNominal(quoted)rate=8%inallcases.Wewanttocompareloancostratesandchooselowestcostloan.WemustmakecomparisononEAR=Equivalent(orEffective)AnnualRatebasis.Simpleannualinterest“Simpleinterest”meansnodiscountoradd-on.

Interest=0.08($100,000)=$8,000 kNOM=EAR=$8,000/$100,000=8.0%Fora1-yearsimpleinterestloan,kNOM=EARDiscountinterestDeductibleinterest=0.08($100,000) =$8,000Usablefunds=$100,000-$8,000 =$92,000INPUTSOUTPUTNI/YRPMTPVFV18.69570-10092RaisingnecessaryfundswithadiscountinterestloanUnderthecurrentscenario,$100,000isborrowedbut$8,000isforfeitedbecauseitisadiscountinterestloan.Only$92,000isavailabletothefirm.If$100,000offundsarerequired,thentheamountoftheloanshouldbe:

Amtborrowed =Amtneeded/(1–discount) =$100,000/0.92=$108,696Discountinterestloanwitha10%compensatingbalanceInterest=0.08($121,951)=$9,756Effectivecost=$9,756/$100,000=9.756%Add-oninterestona12-monthinstallmentloanInterest=0.08($100,000)=$8,000Faceamount=$100,000+$8,000=$108,000Monthlypayment=$108,000/12=$9,000Avgloanoutstanding=$100,000/2=$50,000Approximatecost=$8,000/$50,000=16.0%Tofindtheappropriateeffectiverate,recognizethatthefirmreceives$100,000andmustmakemonthlypaymentsof$9,000.Thisconstitutesanannuity.InstallmentloanFromthecalculatoroutputbelow,wehave:kNOM =12(0.012043) =0.1445=14.45%EAR =(1.012043)12–1=15.45%INPUTSOUTPUTNI/YR