BMGT440ch27-abbreviated

BMGT440ch27-abbrevia - Cash Management Chapter 27 BMGT440 Dr E F Kiss ch27h Key Concepts and Skills Understand the reasons for holding cash

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BMGT440– Dr. E F Kiss ch27h- Cash Management Chapter 27
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BMGT440– Dr. E F Kiss ch27h- Key Concepts and Skills Understand the reasons for holding cash balances, as well as potential methods for determining the target cash balance Understand the concept of float, as well as tools for managing disbursement and collections float Chapter Outline 27.1 Reasons for Holding Cash 27.2 Determining the Target Cash Balance 27.3 Managing the Collection & Disbursement of Cash 27.4 Investing Idle Cash
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BMGT440– Dr. E F Kiss ch27h- 27.1 Reasons for Holding Cash Transactions motive § Ability to cover normal activities of the firm Compensating balances § Hold required balances with financial institutions § Example, borrow $1,000,000 at 8.1% interest. What is total amount of interest payment? If bank requires 10% compensating balance? What amount of the $1,000,000 can you use? What is the effective interest rate that you are paying?
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BMGT440– Dr. E F Kiss ch27h- Other Factors Influencing the Target Cash Balance Borrowing § Borrowing is likely to be more expensive than selling marketable securities. § The need to borrow will depend on management’s desire to hold low cash balances.
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BMGT440– Dr. E F Kiss ch27h- 27.3 Managing the Collection and Disbursement of Cash Accelerating Collections Delaying Disbursements Disbursement Float Zero-Balance Accounts Drafts Ethical and Legal Questions Electronic Data Interchange
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BMGT440– Dr. E F Kiss
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This note was uploaded on 02/22/2011 for the course BMGT 440 taught by Professor White during the Spring '08 term at Maryland.

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BMGT440ch27-abbrevia - Cash Management Chapter 27 BMGT440 Dr E F Kiss ch27h Key Concepts and Skills Understand the reasons for holding cash

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