Chapter 16 - Working Capital Management 现代财务相关管理英文版课件.pptVIP

* * 16 Working Capital Management ?2006 Thomson/South-Western Introduction This chapter deals with the management of working capital, which involves decisions about the optimal overall level of current assets and the optimal mix of short-term funds used to finance the company’s assets. It also discusses short-term credit sources of funding available to a company. These sources include trade credit and bank loans. Working Capital Policy Involves decisions about a company’s current assets (C/A) and current liabilities (C/L) What they consist of How they are used How their mix affects the risk-return characteristics of the company Working capital Total investment in C/A Net working capital C/A – C/L Working Capital Management Firm’s optimal level of C/A Optimal mix of S-T and L-T debt Level of investment in each type of C/A Specific sources and mix of S-T credit the firm should employ For extensive information on working capital: http://strategis.gc.ca/sc_mangb/sources/engdoc/homepage.html Working Capital Represents assets that flow through the firm Turned over at a rapid rate Usually recovered during the operating cycle when inventories are sold and receivables are collected Made necessary by the asynchronous nature of cash receipts and disbursements Decomposing the Operating Cycle Payables deferral period Receivables conversion period  1 2 3 4 Cash conversion cycle Operating Cycle = Inventory Conversion Period + Receivables Conversion Period Inventory Conversion Period = Average Inventory Cost of Sales/ 365 Receivables Conversion Period = Accounts Receivable Annual Credit Sales/ 365 Operating Cycle Analysis Cash Conversion Cycle = Operating Cycle + Payables Deferral Period Operating Cycle Analysis, Continued Payables Deferral Period = Accounts Payable + Salaries, Benefits Payroll Taxes Payable Cost of Sales – Selling, Gen, Admin Exp ( / 365 ) Size and Nature of a Firm’s Investment in C/A Type of product Length