unit 3 & 4. ppt

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Category: Business & Fin..

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about finance

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Slide 1:

Cash Receivables Inventory mgmt

Slide 2:

Cash- is the ready currency to which all liquid assets can be reduced Marketable securities- r short term interest earning money mkt instruments used by firms to obtain a return on temporarily idle funds CASH MGMT

Motives for holding cash:

Motives for holding cash Transaction motive Precautionary motive Speculative motive Compensating motive

Objectives of cash mgmt:

Objectives of cash mgmt Meeting payments schedule Minimizing funds committed to cash balance

Factors determining cash needs:

Factors determining cash needs Synchronization of cash flow Short costs Excess cash balance costs Procurement & mgmt Uncertainty

Cash budget:

Cash budget A statement of inflow & outflow of cash i.e. used to estimate its short term requirements Purposes To coordinate timings of cash needs To take benefit on a/c payable To finance capital expansion To smoothen the production schedule

Elements of cash budget:

Elements of cash budget Selection of time frame Identifying operating & financial cash flow Preparing statement

Cash mgmt: basic strategies:

Cash mgmt: basic strategies Identifying cash cycle Maximizing cash turnover Minimum operating cash Stretching accounts payable Efficient inventory mgmt Speeding collection of a/c rec Combined cash mgmt strategies

Slide 9:

Is also called as trade credit mgmt Cost related r; Collection cost Capital cost Delinquency cost Default cost RECEIVABLE MGMT

Credit policy:

Credit policy Includes Credit standards Credit analysis

Credit stds:

Credit stds Tight/ restrictive std Liberal/ non restrictive std Trade-off with respect to credit std Collection cost Investment in rec Bad debt expenses Sales volume

Credit analysis:

Credit analysis Obtaining credit information Internal source External source Analyses of credit information Quantitative Qualitative

Credit terms :

Credit terms it specifies terms & conditions under which goods r sold It includes; Credit period Cash discount Cash discount period

Collection policies:

Collection policies Procedure followed to collect a/c rec Includes; Degree of collection effort Strict or liberal Type of collection effort letters, reminders, telephone calls etc

Inventory mgmt:

Inventory mgmt Objectives To minimize investments in inventory To meet demand for the product by efficiently organizing production & sales operations

Costs of holding inventory:

Costs of holding inventory Ordering cost Carrying cost

Benefits of holding inventory:

Benefits of holding inventory In purchasing In production In wip In sales