Questions on Short-Term Finance, and Planning and Cash Management

Powerful Essays
Topics: Finance, Inventory, Asset
Finan 5000 - Study guide for Midterm #1
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?

You May Also Find These Documents Helpful

  • Good Essays

    Running head: CASH MANAGEMENT AND SHORT-TERM FINANCING Cash Management and Short-term Financing University of Phoenix Cash Management and Short-term Financing Structured cash management and efficient short-term financing are both beneficial and important for a company to remain competitive in the market; this will help increase potential profit and shareholder value with the rising stock. Cash management is a tool for the company can use to manage idle funds (cash balances) that…

    • 880 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Sources of short term finance 1) Trade creditors This the basic source of finance and many entrepreneurs do not realise that by acquiring items on credit they are obtaining short term finance. Credit just like any other source of finance has interest element hidden which most are not able to recognise. The discount may be offered to encourage early payment and the receiving company may not advantage of the discount the cost arise. It is not a cheap source of finance. On occasions, trade credit is…

    • 1437 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Sources of Finance in Short Term Source of short term finance refers to money that is needed for financial activities carried out for less than one year. These funds are usually used for day to day operations such as payment of wages, inventory ordering, advertisement expenses and so on. There are different sources of rising the short time finance can vary according to way of their usage. Bank Overdraft This is a temporary source found that is provided by bank in which business has a…

    • 1243 Words
    • 5 Pages
    Better Essays
  • Good Essays

    lShort term sources of finance 1) Bank credit * Cash credit * Overdraft * Bill discounting Cash credit Account This account is the primary method in which Banks lend money against the security of commodities and debt. It runs like a current account except that the money that can be withdrawn from this account is not restricted to the amount deposited in the account. Instead, the account holder is permitted to withdraw a certain sum called "limit" or "credit facility" in excess of…

    • 919 Words
    • 4 Pages
    Good Essays
  • Better Essays

    Introduction Proper cash management and efficient short-term financing are both important and beneficial to a company in order to maintain a competitive market share, which will increase profit potential and shareholder value through rising stock. Cash management can be used to lower or eliminate idle cash balances that do not earn revenue, using the freed up cash as sources for short-term financing through interest building securities. Short-term financing allows a company to secure needed funds…

    • 1277 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Case study: Short-term Financial Planning From page 81- 84, Wayne L. Winston, Operations Research, third edition Semicond is a small electronics company that manufactures tape recorders and radios. The per-unit labor costs, raw material costs, and selling price of each product are given in the table below. On December 1, 1998, Semicond has available raw material that is sufficient to manufacture 100 tape recorders and 100 radios. On the same date, the company’s balance sheet as shown in table…

    • 293 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Budgeting? The term ‘budget’ is probably well understood by the layman. Budgeting is an important component of financial success; it makes it easier for people with incomes and expenses of all sizes to make. A manufacturing entity for example, might prepare sales production and administration budgets. The ‘master budget’ is defined as the overall financial plan for the period, which is made up of a budgeted profit and loss account, a budgeted balance sheet and a budgeted cash flow statement. Budgeting…

    • 929 Words
    • 4 Pages
    Better Essays
  • Better Essays

    Budgeting is a key component in management short and long term planning? Contents Introduction ………………………………………………………………………… 3 Budgeting management in short and long term planning …………………….. 4 Summary …………………………………………………………………………… 5 Comment …………………………………………………………………………… 5 References …………………………………………………………………………. 6 Introduction Budget is an estimation of the expenses and revenue over a specific period of time. It can help entity to forecast the expenses and revenue to assess whether…

    • 872 Words
    • 4 Pages
    Better Essays
  • Powerful Essays

    short term financial management

    • 17867 Words
    • 111 Pages

    Inventory Accounts receivable Cash received Collection float Time Accounts payable Disbursement float Payment sent Cash disbursed OBJECTIVES After studying this chapter, you should be able to: • distinguish between solvency and liquidity. • differentiate between solvency ratios and the cash conversion period. • calculate and interpret the cash conversion period. • determine the change in shareholder wealth attributable to changes in the cash conversion period. F unds…

    • 17867 Words
    • 111 Pages
    Powerful Essays
  • Good Essays

    Cash Management

    • 1155 Words
    • 5 Pages

    Cash Management Cash Cycle Factors that influence the desired level of cash Optimal cash inventories Short-term investment strategies The Manager Managing an entity’s Resources Cash Management Inventory Management Working Capital Management Investment in Human Capital Long-term Assets Accounts Receivable Resource Decisions Investment Decisions Operating Decisions Human Resources Decisions Life cycle effects, Business cycle, public events, etc. Recruitment, Selection Training, Productivity…

    • 1155 Words
    • 5 Pages
    Good Essays