课件罗斯公司理财教师手册、英文答案、课件chap026

1、Short-Term Finance and Planning,Key Concepts and Skills,Understand the components of the cash cycle and why it is important Understand the pros and cons of the various short-term financing policies Be able to prepare a cash budget Understand the various options for short-term financing,Chapter Outli

2、ne,26.1 Tracing Cash and Net Working Capital 26.2 Defining Cash in Terms of Other Elements 26.3 The Operating Cycle and the Cash Cycle 26.4 Some Aspects of Short-Term Financial Policy 26.5 Cash Budgeting 26.6 The Short-Term Financial Plan,26.1 Tracing Cash and Net Working Capital,Current Assets are

3、cash and other assets that are expected to be converted to cash within 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,Balance Sheet Model of the Fir

4、m,How much short-term cash flow does a company need to pay its bills?,Net Working Capital,Current Assets,Fixed Assets 1. Tangible 2. Intangible,Shareholders Equity,Current Liabilities,Long-Term Debt,26.2 Defining Cash in Terms of Other Elements,Defining Cash in Terms of Other Elements,An increase in

5、 long-term debt and or equity leads to an increase in cashas does a decrease in fixed assets or a decrease in the non-cash components of net working capital. The sources and uses of cash follow from this reasoning.,26.3 The Operating Cycle and the Cash Cycle,Time,Accounts payable period,Operating cy

6、cle,Cash received,Finished goods sold,Firm receives invoice,Cash paid for materials,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.,

7、Example,Inventory: Beginning = 200,000 Ending = 300,000 Accounts Receivable: Beginning = 160,000 Ending = 200,000 Accounts Payable: Beginning = 75,000 Ending = 100,000 Net sales = 1,150,000 Cost of Goods sold = 820,000,Example,Inventory period Average inventory = (200,000+300,000)/2 = 250,000 Invent

8、ory turnover = 820,000 / 250,000 = 3.28 times Inventory period = 365 / 3.28 = 111.3 days Receivables period Average receivables = (160,000+200,000)/2 = 180,000 Receivables turnover = 1,150,000 / 180,000 = 6.39 times Receivables period = 365 / 6.39 = 57.1 days Operating cycle = 111.3 + 57.1 = 168.4 d

9、ays,Example,Payables Period Average payables = (75,000+100,000)/2 = 87,500 Payables turnover = 820,000 / 87,500 = 9.37 times Payables period = 365 / 9.37 = 38.9 days Cash Cycle = 168.4 38.9 = 129.5 days We have to finance our inventory for 129.5 days. If we want to reduce our financing needs, we nee

10、d to look carefully at our receivables and inventory periods they both seem excessive.,26.4 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 firms investment in current assets, usually measured relative to the

11、 firms 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,Size of Investment in Current Assets,A flexible short-term finance policy would maintain a h

12、igh ratio of current assets to sales. Keeping large cash balances and investments in marketable securities Large investments in inventory Liberal credit terms A restrictive short-term finance policy would maintain a low ratio of current assets to sales. Keeping low cash balances, no investment in ma

13、rketable securities Making small investments in inventory Allowing no credit sales (thus no accounts receivable),Carrying Costs and Shortage Costs,$,Investment in Current Assets ($),Carrying costs,Total costs of holding current assets.,Appropriate Flexible Policy,$,Investment in Current Assets ($),C

14、arrying costs,Total costs of holding current assets.,Appropriate Restrictive Policy,$,Investment in Current Assets ($),Carrying costs,Total costs of holding current assets.,Alternative Financing Policies,A flexible short-term finance policy means a low proportion of short-term debt relative to long-

15、term financing. A restrictive short-term finance policy means a high proportion of short-term debt relative to long-term financing. In an ideal world, short-term assets are always financed with short-term debt, and long-term assets are always financed with long-term debt. In this world, net working

16、capital is zero.,26.5 Cash Budgeting,A cash budget is a primary tool of short-run financial planning. The idea is simple: Record the estimates of cash receipts and disbursements. Cash Receipts Arise from sales, but we need to estimate when we actually collect Cash Outflow Payments of Accounts Payabl

17、e Wages, Taxes, and other Expenses Capital Expenditures Long-Term Financial Planning,Example,Pet Treats Inc. specializes in gourmet pet treats and receives all income from sales Sales estimates (in millions) Q1 = 500; Q2 = 600; Q3 = 650; Q4 = 800; Q1 next year = 550 Accounts receivable Beginning rec

18、eivables = $250 Average collection period = 30 days Accounts payable Purchases = 50% of next quarters sales Beginning payables = 125 Accounts payable period is 45 days Other expenses Wages, taxes and other expense are 30% of sales Interest and dividend payments are $50 A major capital expenditure of

19、 $200 is expected in the second quarter The initial cash balance is $80 and the company maintains a minimum balance of $50,Example,ACP = 30 days, this implies that 2/3 of sales are collected in the quarter made, and the remaining 1/3 are collected the following quarter. Beginning receivables of $250 will be collected in the first quarter.,Example,Payables period is 45 days, so half of the purchases will be paid for each quarter, and the remaining will be paid the following quarter. Beginning