Managing Payables

Managing Payables - accounts. • The firm must WSJ –...

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Managing Payables 1 Payables can be viewed as interest- free financing. The financial manager wants: The longest and/or most favorable credit terms available from its suppliers.
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A Few Introductory Thoughts… 2
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Short-Term Financial Managers 3 The following managers deal with short-term financial issues: Essentials of Corporate Finance (Ross)
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Short-Term Planning 4 The ultimate goal of short-term planning is to make sure there is enough cash on hand to operate. Over the six-month planning period, this firm has ample cash. Yet, during the six-months, it ran out of cash.
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How Much WC Is Enough? 5 Approximately 40%-50% of assets in U.S. firms are invested in working capital
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Unformatted text preview: accounts. • The firm must WSJ – 12/10/10 Investor Preferences for Excess Cash 6 • Only 11% of investors want firms to hoard cash. – Microsoft example CFO Magazine – 7/15/10 Early Warning Signs 7 • Early warning signs of insufficient working capital include: – Pressure on existing cash reserves. – Unusual cash generating activities (e.g. offering big cash discounts). – Bank overdrafts. – Emergency bank loans. Working Capital Survey 8 • Select portions of the annual Working Capital Survey conducted by CFO Magazine are provided in the link below: – http://www.cfo.com/media/pdf/1006WCcharts.pdf...
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This note was uploaded on 01/19/2012 for the course FIN 4260 taught by Professor Victorwakeling during the Spring '12 term at Kennesaw.

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Managing Payables - accounts. • The firm must WSJ –...

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