上海交通大学：《财务管理》教学资源（PPT课件，英文版）Chapter 19 Short-Term Financial Planning

Chapter 19 Short-Term Financial Planning 0

0 Chapter 19 Short-Term Financial Planning

Chapter Outline Tracing Cash and Net Working Capital The Operating Cycle and the Cash Cycle Some Aspects of Short-Term Financial Policy ■The Cash Budget Short-Term Borrowing A Short-Term Financial Plan

1 Chapter Outline n Tracing Cash and Net Working Capital n The Operating Cycle and the Cash Cycle n Some Aspects of Short-Term Financial Policy n The Cash Budget n Short-Term Borrowing n A Short-Term Financial Plan

Key Concepts and Skills Be able to compute the operating and cash cycles and understand why they are important Understand the different types of short-term financial policy Understand the essentials of short-term financial planning 2

2 Key Concepts and Skills n Be able to compute the operating and cash cycles and understand why they are important n Understand the different types of short-term financial policy n Understand the essentials of short-term financial planning

Sources and Uses of Cash Sources of Cash Uses of Cash Obtaining financing: Paying creditors or Increase in long-term stockholders debt Decrease in long-term Increase in equity debt Increase in current ■Decrease in equity liabilities Decrease in current Selling assets liabilities Decrease in current o Buying assets assets ■Increase in current ■ Decrease in fixed assets assets Increase in fixed assets

3 Sources and Uses of Cash n Sources of Cash q Obtaining financing: n Increase in long-term debt n Increase in equity n Increase in current liabilities q Selling assets n Decrease in current assets n Decrease in fixed assets n Uses of Cash q Paying creditors or stockholders n Decrease in long-term debt n Decrease in equity n Decrease in current liabilities q Buying assets n Increase in current assets n Increase in fixed assets

The Operating Cycle The time it takes to receive inventory,sell it, and collect on the receivables generated from the sale of the inventory Operating cycle inventory period accounts receivable period Inventory period time inventory sits on the shelf Accounts receivable period time it takes to collect on receivables

4 The Operating Cycle n The time it takes to receive inventory, sell it, and collect on the receivables generated from the sale of the inventory n Operating cycle = inventory period + accounts receivable period q Inventory period = time inventory sits on the shelf q Accounts receivable period = time it takes to collect on receivables

The Cash Cycle The time between payment for inventory and receipt from the sale of inventory a Cash cycle operating cycle-accounts payable period a Accounts payable period time between receipt of inventory and payment for it The cash cycle measures how long we need to finance inventory and receivables 5

5 The Cash Cycle n The time between payment for inventory and receipt from the sale of inventory n Cash cycle = operating cycle – accounts payable period q Accounts payable period = time between receipt of inventory and payment for it n The cash cycle measures how long we need to finance inventory and receivables

Table 16.1 TABLE 16.1 Managers who deal with short-term financial problems Duties Related to Short-Term Title of Manager Financial Management Assets/Liabilities Influenced Cash manager Collection,concentration,disbursement;short-term Cash,marketable securities, investments;short-term borrowing;banking relations short-term loans Credit manager Monitoring and control of accounts receivable;credit Accounts receivable policy decisions Marketing manager Credit policy decisions Accounts receivable Purchasing manager Decisions on purchases,suppliers;may negotiate Inventory,accounts payable payment terms Production manager Setting of production schedules and materials Inventory,accounts payable requirements Payables manager Decisions on payment policies and on whether to take Accounts payable discounts Controller Accounting information on cash flows;reconciliation of Accounts receivable,accounts payable accounts payable;application of payments to accounts receivable Source:Ned C.Hill and William L.Sartoris,Short-Term Financial Management,2nd ed.(New York:Macmillan,1992),p.15. 6

6 Table 16.1

Example Information Item Beginning Ending Average Inventory 200,000 300,000 250,000 Accounts 160,000 200,000 180,000 Receivable Accounts 75,000 100,000 87,500 Payable Net Sales $1,150,000 Cost of Goods Sold $820,000 7

7 Example Information Item Beginning Ending Average Inventory 200,000 300,000 250,000 Accounts Receivable 160,000 200,000 180,000 Accounts Payable 75,000 100,000 87,500 Net Sales = $1,150,000 Cost of Goods Sold = $820,000

Example:Operating Cycle Inventory period aAverage inventory=(200,000+300,000)/2=250,000 Inventory turnover 820,000/250,000 3.28 times Inventory period 365/3.28 111 days Receivables period Average receivables =(160,000+200,000)/2 =180,000 Receivables turnover 1,150,000/180,000 6.39 times Receivables period 365/6.39 57 days Operating cycle 111 57 =168 days 8

8 Example: Operating Cycle n Inventory period q Average inventory = (200,000+300,000)/2 = 250,000 q Inventory turnover = 820,000 / 250,000 = 3.28 times q Inventory period = 365 / 3.28 = 111 days n Receivables period q Average receivables = (160,000+200,000)/2 = 180,000 q Receivables turnover = 1,150,000 / 180,000 = 6.39 times q Receivables period = 365 / 6.39 = 57 days n Operating cycle = 111 + 57 = 168 days

Example:Cash Cycle Accounts Payable Period 365/payables turnover Payables turnover COGS Average AP ■PT=820,000/87,500=9.4 times Accounts payables period 365/9.4 39 days Cash cycle 168-39 129 days So.we have to finance our inventory and receivables for 129 days 9

9 Example: Cash Cycle n Accounts Payable Period = 365 / payables turnover q Payables turnover = COGS / Average AP n PT = 820,000 / 87,500 = 9.4 times q Accounts payables period = 365 / 9.4 = 39 days n Cash cycle = 168 – 39 = 129 days n So, we have to finance our inventory and receivables for 129 days