Ch.16_Current Asset Management_Inst

Ch.16_Current Asset Management_Inst - Module 2: Corporate...

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1 Module 2: Corporate Finance
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2 CHAPTER 16 Current Asset Management and Financing Investment and financing policies Cash and marketable securities management Receivables management
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3 Learning Objectives Define and identify current asset investment and financing policies Calculate and explain how to improve net float Calculate and explain benefits of accelerating receivables collection periods Discuss alternative ways of monitoring receivables
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4 Short-Term Financial Management Goal - support operations at the lowest possible cost Ensure liquidity Adequately support operations
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5 Current Asset Investment Policies Current Assets ($) Volume High Moderate Low
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6 Current Asset Financing Policies New division of assets into permanent and temporary Permanent: always on the books – needed to support regular operations Temporary: fluctuate with seasonal or cyclical operations
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7 Current Asset Financing Policies Moderate - matches maturity of assets with maturity of financing Aggressive - uses short-term financing to finance permanent assets Conservative - uses permanent capital to finance temporary assets
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8 Cash Management Goal - hold minimum amount necessary to meet liquidity requirements Primary cash management technique is float management : Acceleration of receipts Disbursement control
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9 Cash Management Disbursement float:
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This note was uploaded on 02/24/2010 for the course HPM 340 taught by Professor Reiter during the Spring '10 term at UNC.

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Ch.16_Current Asset Management_Inst - Module 2: Corporate...

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