Multi period cash flow problems
Download
1 / 8

Multi-Period Cash Flow Problems - PowerPoint PPT Presentation


  • 803 Views
  • Updated On :

Multi-Period Cash Flow Problems The amount of money invested and tied up today affects the amount of money available in subsequent time periods for future decisions What are the consequences of today’s decision on future decisions? What is the optimal decision for today and tomorrow?

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Multi-Period Cash Flow Problems' - omer


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Multi period cash flow problems l.jpg
Multi-Period Cash Flow Problems

  • The amount of money invested and tied up today affects the amount of money available in subsequent time periods for future decisions

  • What are the consequences of today’s decision on future decisions? What is the optimal decision for today and tomorrow?


Examples l.jpg
Examples

  • How to invest current given amount of money over a specified planning horizon so as to have necessary cash flow available in certain periods and maximize the return on the initial investment? (Highint case)

  • How to invest money over a specified planning horizon so as to have necessary cash flow available in certain periods and minimize the initial investment? (Taco-Viva case)


Slide3 l.jpg

Cash Budgeting

1. Beginning cash balance

2. Cash receipts

a. Collection of accounts receivable

b. Investment income

3. Cash disbursements

a. Payment of accounts payable

b. Payment of accrued expenses


Cash budgeting continued l.jpg
Cash Budgeting (continued)

4. Ending cash balance

5. Required cash balance

(minimum cash balance)

6. Investing surplus cash

7. Covering cash shortage


Cash management strategies l.jpg
Cash Management Strategies

  • Accelerating collections

  • Stretching payables

  • Tightening credit terms


Trade credit terms l.jpg
Trade Credit Terms

  • CIA (cash in advance)

  • CBD (cash before delivery)

    3. COD (cash on delivery)

    4. Cash

    5. Standard terms, e.g., 2/10, net 30


Sources of short term financing l.jpg
Sources of Short-term Financing

1. Trade credit

  • Line of credit - an informal agreement between a bank and a borrower indicating the maximum credit the bank will extend to the borrower

    3. Revolving credit agreement - a formal line of credit often used by large firms (commitment fee)


Slide8 l.jpg

4. Pledging accounts receivable - the use of accounts receivable as collateral against a loan

5. Factoring accounts receivable - the sale of accounts receivable

6. New note from owner/corporate officer


ad