Short-Term Finance and Planning/Cash Management
Working Capital Management Overview (Ch.1)
What is working capital?
What is the primary objective of working capital management?
What should financial managers focus on in order to maximize value when managing working capital? What is an opportunity cost?
What types of short-term liabilities have no explicit interest cost? Why?
The Operating Cycle and the Cash Cycle(Ch.1)
What is the operating cycle? What is the cash cycle?
What do we want to accomplish in managing the cash cycle, and why?
What are the three elements of the cash cycle?
What can managers do to control the cash cycle?
What are the tradeoffs in shortening the cash cycle?
Know how to calculate:
Elements of the cash cycle and the operating cycle
Managing the Working Capital Cycle (Ch.1)
For what aspects of working capital does financial management have responsibility?
What are the two key areas of working capital policy set by financial management?
What are the objectives in setting working capital asset policy?
What is the difference between temporary current assets and permanent current assets?
In what ways can working capital assets be financed?
What is spontaneous financing of working capital assets? How is the amount to be used determined? What should be considered in choosing between short-term and permanent financing sources for funding working capital assets? What are the tradeoffs?
How can the lifetime of assets be matched to the maturity of funding sources (i.e., what is a restrictive working capital financing strategy)?
How can working capital assets be financed more flexibly than with a restrictive strategy?
How can they be financed more aggressively?
Cash Management (Ch.1 & Ch.2)
What is the focus of short-term financial planning?
What are the steps of the short-term financial planning process?
How are cash collections forecast?
How are cash disbursements forecast?