Slide 1
Working Capital Basics
Working Capital, Funding Requirements, and the Current Accounts
The Short-Term Liabilities Spontaneous Financing
Working Capital and the Current Accounts
Objective of Working Capital Management
Objective of Working Capital Management
Objective of Working Capital Management
Figure 16-1 Cash Conversion Cycle
Figure 16-2 Timeline Representation of Cash Conversion Cycle
Permanent and Temporary Working Capital
Figure 16-3 Working Capital Needs of Different Firms
Financing Net Working Capital
Slide 14
Alternative Financing Policies
Figure 16-4a Working Capital Financing Policies
Figure 16-4b Working Capital Financing Policies
Working Capital Policy
Sources of Short-term Financing
Spontaneous Financing
Prompt Payment Discount
Abuses of Trade Credit Terms
Unsecured Bank Loans
Unsecured Bank Loans
Revolving Credit Agreement
Concept Connection Example 16-2 Revolving Credit Agreements
Concept Connection Example 16-2 Revolving Credit Agreements
Compensating Balances
Clean-Up Requirements
Commercial Paper
Short-Term Credit Secured by Current Assets
Short-Term Credit Secured by Current Assets
Concept Connection Example 16-4 Pledging Accounts Receivables
Concept Connection Example 16-4 Pledging Accounts Receivables
Factoring Receivables
Inventory Financing
Cash Management
Objective of Cash Management
Marketable Securities
Figure 16-5 The Check-Clearing Process
Check Disbursement and Collection Procedures
“Check 21”
Accelerating Cash Receipts
Figure 16-6 A Lock Box System in the Check-Clearing Process
Accelerating Cash Receipts
Managing Cash Outflow
Concept Connection Example 16-7 Evaluating Lock-Box Systems
Concept Connection Example 16-7 Evaluating Lock-Box Systems
Managing Accounts Receivable
Determinants of Receivables Balance
Terms of Sale
Collections Policy
Inventory Management
Benefits and Costs of Carrying Adequate Inventory
Inventory Control and Management
Figure 16-7 Inventory on Hand for a Steadily Used Item
Figure 16-8 Inventory Costs and the EOQ
Economic Order Quantity (EOQ) Model
Slide 59
Slide 60
Safety Stocks, Reorder Points and Lead Times
Figure 16-9 Pattern of Inventory on Hand
Safety Stock and the EOQ
Tracking Inventories The ABC System
Just In Time (JIT) Inventory Systems