Lecture Business finance (9/e) - Chapter 23: Management of short-term assets: Liquid assets and accounts receivable

Chapter 23 Management of Short-Term Assets: Liquid Assets and Accounts Receivable Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 23–1 Prepared by Dr Buly Cardak Learning Objectives • Define liquid assets. • Distinguish between liquidity management and treasury management. • Identify the motives for holding liquid assets. • Prepare a cash budget. • Apply cash management models. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 23–2 Prepared by Dr Buly Cardak Learning Objectives (cont.) • Identify avenues for short-term investment by companies. • Understand the application of portfolio theory to investment in short-term securities. • Define accounts receivable and distinguish between trade credit and consumer credit. • Identify the benefits and costs of holding accounts receivable. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 23–3 Prepared by Dr Buly Cardak Learning Objectives (cont.) • Identify the four elements of credit policy. • Understand the factors in implementing a collection policy. • Apply the net present value method to evaluate alternative credit and collection policies. • Understand the ways in which accounts receivable may be employed as a means of financing. • Apply financial statement analysis to short-term asset management. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 23–4 Prepared by Dr Buly Cardak Introduction • Liquidity is essential in order to ensure that creditors are paid on time. • This ensures the business can continue to operate — solvency. • However, liquidity is costly and there is a trade off between costs and benefits, along with an optimal level of liquidity. • Many companies sell on credit, leading to accounts receivable — need to manage accounts receivable efficiently to maximise company value. Copyright 2006 McGraw-Hill Australia Pty Ltd PPTs t/a Business Finance 9e by Peirson, Brown, Easton, Howard and Pinder 23–5 Prepared by Dr Buly Cardak ... - tailieumienphi.vn