Working-Capital-Management课件.ppt

《Working-Capital-Management课件.ppt》由会员分享，可在线阅读，更多相关《Working-Capital-Management课件.ppt（34页珍藏版）》请在得力文库 - 分享文档赚钱的网站上搜索。

1、 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Working Capital ManagementAlternative Working Capital PoliciesCash ManagementInventory and A/R ManagementTrade CreditBank LoansChapter 1616-1 2013 Cengage

2、 Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Working Capital TerminologyWorking capital:current assets.Net working capital:current assets minus current liabilities.Net operating working capital:current assets min

3、us(current liabilities less notes payable).Current assets investment policy:deciding the level of each type of current asset to hold,and how to finance current assets.Working capital management:controlling cash,inventories,and A/R,plus short-term liability management.16-2 2013 Cengage Learning.All R

4、ights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Selected Ratios for SKI Inc.SKIInd AvgCurrent ratio1.75x2.25xDebt/Assets58.76%50.00%Turnover of cash&securities16.67x22.22xDays sales outstanding45.6332.00Inventory turnover4.82x7.00

5、 xFixed assets turnover11.35x12.00 xTotal assets turnover2.08x3.00 xProfit margin2.07%3.50%Return on equity10.45%21.00%16-3 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.How does SKIs current assets in

6、vestment policy compare with its industry?Current assets investment policy is reflected in the current ratio,turnover of cash and securities,inventory turnover,and days sales outstanding.These ratios indicate SKI has large amounts of working capital relative to its level of sales.SKI is either very

7、conservative or inefficient.16-4 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible websi

8、te,in whole or in part.Working Capital Financing PoliciesModerate:Match the maturity of the assets with the maturity of the financing.Aggressive:Use short-term financing to finance permanent assets.Conservative:Use permanent capital for permanent assets and temporary assets.16-6 2013 Cengage Learnin

9、g.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Moderate Financing Policy16-7YearsLower dashed line would be more aggressive.$Perm C.A.Fixed AssetsTemp.C.A.S-TLoansL-T Fin:Stock,Bonds,Spon.C.L.2013 Cengage Learning.All Righ

10、ts Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Conservative Financing Policy16-8$YearsPerm C.A.Fixed AssetsMarketable securitiesZero S-TDebtL-T Fin:Stock,Bonds,Spon.C.L.2013 Cengage Learning.All Rights Reserved.May not be scanned,co

11、pied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Cash Conversion Cycle16-10 2013 Cengage Learning.All Rights Reserved.May

12、not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Minimizing Cash HoldingsUse a lockboxInsist on wire transfers and debit/credit cards from customersSynchronize inflows and outflowsReduce need for“safety stock”of cashIncrease forecast accuracyHold mar

13、ketable securitiesNegotiate a line of credit16-11 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly

14、 accessible website,in whole or in part.SKIs Cash Budget for January and February16-13JanuaryFebruaryCollections$67,651.95$62,755.40Purchases44,603.7536,472.65Wages6,690.565,470.90Rent 2,500.00 2,500.00Total payments$53,794.31$44,443.55Net cash flows$13,857.64$18,311.85 2013 Cengage Learning.All Rig

15、hts Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.How could bad debts be worked into the

16、cash budget?Collections would be reduced by the amount of the bad debt losses.For example,if the firm had 3%bad debt losses,collections would total only 97%of sales.Lower collections would lead to higher borrowing requirements.16-15 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied

17、,or duplicated,or posted to a publicly accessible website,in whole or in part.Analyze SKIs Forecasted Cash BudgetCash holdings will exceed the target balance for each month,except for October and November.Cash budget indicates the company is holding too much cash.SKI could improve its EVA by either

18、investing cash in more productive assets,or by returning cash to its shareholders.16-16 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied

19、,or duplicated,or posted to a publicly accessible website,in whole or in part.Inventory CostsTypes of inventory costsCarrying costs:storage and handling costs,insurance,property taxes,depreciation,and obsolescence.Ordering costs:cost of placing orders,shipping,and handling costs.Costs of running sho

20、rt:loss of sales or customer goodwill,and the disruption of production schedules.Reducing inventory levels generally reduces carrying costs,increases ordering costs,and may increase the costs of running short.16-18 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or

21、posted to a publicly accessible website,in whole or in part.Is SKI holding too much inventory?SKIs inventory turnover(4.82x)is considerably lower than the industry average(7.00 x).The firm is carrying a large amount of inventory per dollar of sales.By holding excessive inventory,the firm is increasi

22、ng its costs,which reduces its ROE.Moreover,this additional working capital must be financed,so EVA is also lowered.16-19 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.If SKI reduces its inventory with

23、out adversely affecting sales,what effect will this have on the cash position?Short run:Cash will increase as inventory purchases decline.This will reduce financing or target cash balance.Long run:Company is likely to take steps to reduce its cash holdings and increase its EVA.The“excess”cash can be

24、 used to make investments in more productive assets such as plant and equipment resulting in an increase in operating income increasing its EVA.Alternately,can distribute“excess”cash to its shareholders through higher dividends or repurchasing shares resulting in a lower cost of capital increasing i

25、ts EVA.16-20 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Do SKIs customers pay more or less promptly than those of its competitors?SKIs DSO(45.6 days)is well above the industry average(32 days).SKIs

26、customers are paying less promptly.SKI should consider tightening its credit policy in order to reduce its DSO.16-21 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Elements of Credit Policy1.Credit Peri

27、od:How long to pay?Shorter period reduces DSO and average A/R,but it may discourage sales.2.Cash Discounts:Lowers price.Attracts new customers and reduces DSO.3.Credit Standards:Restrictive standards tend to reduce sales,but reduce bad debt expense.Fewer bad debts reduce DSO.4.Collection Policy:How

28、tough?Restrictive policy will reduce DSO but may damage customer relationships.16-22 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or

29、 duplicated,or posted to a publicly accessible website,in whole or in part.If SKI reduces its DSO without adversely affecting sales,how would this affect its cash position?Short run:If customers pay sooner,this increases cash holdings.This will reduce financing or target cash balance needed.Long run

30、:Over time,the company would hopefully invest the cash in more productive assets,or pay it out to shareholders.Both of these actions would increase EVA.16-24 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in pa

31、rt.What is trade credit?Trade credit is credit furnished by a firms suppliers.Trade credit is often the largest source of short-term credit,especially for small firms.Spontaneous,easy to get,but cost can be high.16-25 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,

32、or posted to a publicly accessible website,in whole or in part.Terms of Trade CreditA firm buys$3,000,000 net($3,030,303 gross)on terms of 1/10,net 30.The firm can forego discounts and pay on Day 40,without penalty.16-26 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicat

33、ed,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Nominal Cost of Trade CreditThe firm loses 0.01($3,030,303)=$30,303 of discounts to obtai

34、n$246,575 in extra trade credit:rNOM=$30,303/$246,575=0.1229=12.29%The$30,303 is paid throughout the year,so the effective cost of costly trade credit is higher.16-28 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole

35、 or in part.Nominal Cost of Trade Credit Formula14-29 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publ

36、icly accessible website,in whole or in part.Bank LoansThe firm can borrow$100,000 for 1 year at an 8%nominal rate.Interest may be set under one of the following scenarios:Simple annual interestInstallment loan,add-on,12 months16-31 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,

37、or duplicated,or posted to a publicly accessible website,in whole or in part.Simple Annual InterestSimple interest means no discount or add-on.Interest=0.08($100,000)=$8,000rNOM=EAR=$8,000/$100,000=8.0%For a 1-year simple interest loan,rNOM=EAR.16-32 2013 Cengage Learning.All Rights Reserved.May not

38、 be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Add-on InterestInterest=0.08($100,000)=$8,000Face amount=$100,000+$8,000=$108,000Monthly payment=$108,000/12=$9,000Avg.loan outstanding=$100,000/2=$50,000Approximate cost=$8,000/$50,000=16.0%To find the e

39、xact effective rate,recognize that the firm receives$100,000 and must make monthly payments of$9,000(like an annuity).16-33 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied,or duplicated,or posted to a publicly accessible website,in whole or in part.Add-on InterestFrom the calculator output below,we have:rNOM=12(0.012043)=0.1445=14.45%EAR=(1.012043)12 1=15.45%16-34INPUTSOUTPUTNI/YRPMTPVFV121.2043100-90