Business Finance Ch. 7

Business Finance Ch. 7 - Ch 7 I Cash management A Cash is a...

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  February 18, 2008 Ch. 7 I. Cash management A. Cash is a necessary but low earning asset B. Financial managers attempt to: 1. Minimize cash balances 2. Meet obligations C. Reasons for holding cash 1. Transactions 2. Compensating balances 3. Precautionary needs D. Temporarily exceeds cash balance are transferred to intersomething accounts. II. Collection and disbursements  A. The financial manager attempts to  1. Speed up inflow 2. Slow outflow B. Playing float – float is the difference between the balance in the check book and  the balance in the bank.  C. Sweep Accounts 1. Maintain zero balance in the checking account 2. End of the day balance is swept into an interest bearing account. 3. Overdrafts are covered with transfers from the interest bearing account.  D. Lock Boxes
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1. Customers remit payments locally. 2.
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Business Finance Ch. 7 - Ch 7 I Cash management A Cash is a...

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