TAILIEUCHUNG - Lecture Fundamentals of financial management: Chapter 7 - Gregory A. Kuhlemeyer, Carroll College, Waukesha

Chapter 8 - Overview of working capital management. After studying chapter 8, you should be able to: Explain how the definition of “working capital” differs between financial analysts and accountants, understand the two fundamental decision issues in working capital management – and the trade-offs involved in making these decisions, Discuss how to determine the optimal level of current assets,. | Chapter 8 Overview of Working Capital Management © 2001 Prentice-Hall, Inc. Fundamentals of Financial Management, 11/e Created by: Gregory A. Kuhlemeyer, . Carroll College, Waukesha, WI Overview of Working Capital Management Working Capital Concepts Working Capital Issues Financing Current Assets: Short-Term and Long-Term Mix Combining Liability Structure and Current Asset Decisions Working Capital Concepts Net Working Capital Current Assets - Current Liabilities. Gross Working Capital The firm’s investment in current assets. Working Capital Management The administration of the firm’s current assets and the financing needed to support current assets. Significance of Working Capital Management In a typical manufacturing firm, current assets exceed one-half of total assets. Excessive levels can result in a substandard Return on Investment (ROI). Current liabilities are the principal source of external financing for small firms. Requires continuous, day-to-day managerial supervision. Working capital management affects the company’s risk, return, and share price. Working Capital Issues Assumptions 50,000 maximum units of production Continuous production Three different policies for current asset levels are possible Optimal Amount (Level) of Current Assets 0 25,000 50,000 OUTPUT (units) ASSET LEVEL ($) Current Assets Policy C Policy A Policy B Impact on Liquidity Liquidity Analysis Policy Liquidity A High B Average C Low Greater current asset levels generate more liquidity; all other factors held constant. Optimal Amount (Level) of Current Assets 0 25,000 50,000 OUTPUT (units) ASSET LEVEL ($) Current Assets Policy C Policy A Policy B Impact on Expected Profitability Return on Investment = Net Profit Total Assets Let Current Assets = (Cash + Rec. + Inv.) Return on Investment = Net Profit Current + Fixed Assets Optimal Amount (Level) of Current Assets 0 25,000 50,000 OUTPUT (units) ASSET LEVEL ($) Current Assets Policy C Policy A Policy B Impact on Expected .

TỪ KHÓA LIÊN QUAN
TAILIEUCHUNG - Chia sẻ tài liệu không giới hạn
Địa chỉ : 444 Hoang Hoa Tham, Hanoi, Viet Nam
Website : tailieuchung.com
Email : tailieuchung20@gmail.com
Tailieuchung.com là thư viện tài liệu trực tuyến, nơi chia sẽ trao đổi hàng triệu tài liệu như luận văn đồ án, sách, giáo trình, đề thi.
Chúng tôi không chịu trách nhiệm liên quan đến các vấn đề bản quyền nội dung tài liệu được thành viên tự nguyện đăng tải lên, nếu phát hiện thấy tài liệu xấu hoặc tài liệu có bản quyền xin hãy email cho chúng tôi.
Đã phát hiện trình chặn quảng cáo AdBlock
Trang web này phụ thuộc vào doanh thu từ số lần hiển thị quảng cáo để tồn tại. Vui lòng tắt trình chặn quảng cáo của bạn hoặc tạm dừng tính năng chặn quảng cáo cho trang web này.