Planning. Cash Flow. Sixth Edition. James J. Jurinski. David T. Filipek

Transcription

1 Planning Cash Flow Sixth Edition James J. Jurinski David T. Filipek

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3 Planning Cash Flow Sixth Edition

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5 Contents About This Course How to Take This Course 1 Working Capital 1 Objectives of Financial Management The Operating Cycle Working Capital Versus Cash Definition of Working Capital Adequacy of Cash and Working Capital Working Capital Policies Aggressive Approach Conservative Approach Middle-of-the-Road Approach Ratio Analysis The Current Ratio The Quick Ratio The Question of Timing Average Collection Period Agmg Schedule Working Capital Versus Liquidity Adequacy of Working Capital and Cash Importance of Cash Flow Analysis xi... xlll 2 Cash Flow Planning, Analysis, and Reporting 17 Cash Flow Versus Profit Planning xvii V

6 vi PLANNING CASH FLOW Planning Periods Predictability of the Size of Cash Flows Predictability of the Timing of Cash Flows Size of Cash Balances Developing the Plan Planning Versus Forecasting Sensitivity Analysis Cash Flow Analysis Computer-Based Cash Forecasting Cash Flow Reporting Statement of Cash Flows Analysis 3 Liquidity Management 35 Four Goals of Corporate Cash Management Accurate Forecasting of Cash Flows Maximization of Internal Sources of Cash Assuring Access to External Sources Investing Idle Cash The Nature of Corporate Cash The Costs of Cash Inadequacy The Costs of Cash Trade-offs Cash Management Systems Cash Collection Concentration Systems Cash Disbursement International Cash Management 4 Managing Cash Balances 53 The Costs of Cash Balances Transactions Motive Precautionary Motive Speculative Motive Compensating Balances The Costs of Holding Cash Investment Philosophy Four Criteria in Investing Surplus Cash Types of Money-Market Instruments T-Bills Commercial Paper Repos

7 CONTENTS vii CDs Banker s Acceptances Eurodollars / Municipals ARPS S 5 Accounts Receivable Management 67 Sales Patterns Credit Policies Economic Factors in Credit Policy Credit Scoring Setting Credit Terms Sources of Information Monitoring Collection Policies Accounts Receivable Analysis Aging Analysis Average Collection Period Analysis Other Analysis Methods, \ I 6 Inventory Management 87 Inventory Management Policies Traditional Inventory Management Just-in-Time Inventory Management Types of Inventory Determining Inventory Levels Economic Order Quantity Fixed Order Cycle \ I ) Inventory Analysis and Control Inventory Turnover Dollar Limits Maximum-Minimum Controls ABC Analysis Simulation Using Computers MRP Relation to JIT

8 viii PLANNING CASH FLOW 7 Bank Sources of Funds 111 Short-Term Funds The Nature of Bank Lending Characteristics of Bank Loans Interest Rates Security Requirements Maturity of the Loan Intermediate-Term Bank Loans Amortization Schedules Restrictive Covenants The Cost of Term Loans Uses of Term Loans Advantages and Disadvantages The Process of Obtaining Bank Credit 8 Nonbank Sources of Funds 133 Using Trade Credit Liberal Credit to Increase Sales Credit and Seasonal Business Who Pays the Cost? Advantages of Trade Credit Commercial Paper Commercial Paper Ratings Advantages of Commercial Paper Eurocommercial Paper Evaluation of Commercial Paper Banker s Acceptances Converting Assets into Sources of Funds Asset-Based Financing Accounts Receivable Inventory Other Asset-Based Borrowing Insurance Loans Pension Funds Equipment Financing Small Business Administration Loans SBICs Other Nonbank Sources

9 CONTENTS 9 Making the Financial Decision 159 Determining Short-Term Needs Reviewing the Sources Controlling Disbursements Using Intermediate-Term Credit Short-Term Financing Options Making the Choice Additional Factors Funds Availability Using Quantitative Techniques Linear Programming Simulation Bibliography 177 Post Test 181 The Case Study 191 The Case Study Solution Selected Readings 217 Index 235 ix

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