Principles of Finance · free preview
Cash and Receivables Management
Cash management balances liquidity against yield through float management and marketable securities portfolios, while receivables management sets credit standards and collection policy, trading sales lift against the funding cost of customer credit.
1. Cash management's two jobs
Cash management's two jobs
2. Receivables, the credit policy
Receivables, the credit policy
3. Aging schedules and monitoring
Aging schedules and monitoring
4. The combined working capital position
The combined working capital position
5. The transactions motive
What does the transactions motive for holding cash cover?
6. Collection float
What is collection float, and how does a firm reduce it?
7. The four credit policy parts
Which four parts make up a receivables credit policy?
8. The relaxation trade-off
A firm relaxes its credit standards to grow sales. What costs does it accept?
9. The aging schedule's warning
What does a swelling sixty-day bucket in the aging schedule signal?
10. The marginal optimum
According to the lesson, where should the credit policy's relaxation stop?
11. The spendability gap
What two-word term names the time between a customer's payment and the cash becoming spendable? Answer in lowercase.
12. The overnight money's market
What two-word market, trading Treasury bills and repurchase agreements, holds the cash surplus? Answer in lowercase.
13. The ledger monitor
What two-word schedule sorts receivables by how long they have been outstanding? Answer in lowercase.
14. The managed ratio
What three-word term names the collection-period ratio that credit policy now manages as a target? Answer in lowercase.
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