working capital, powerpoint show

《working capital, powerpoint show》由会员上传分享，免费在线阅读，更多相关内容在教育资源-天天文库。

1、CHAPTER20WorkingCapitalManagementAlternativeworkingcapitalpoliciesCash,inventory,andA/RmanagementAccountspayablemanagementShort-termfinancingpoliciesBankdebtandcommercialpaperBasicDefinitionsGrossworkingcapital:Totalcurrentassets.Networkingcapital:Curr

2、entassets-Currentliabilities.Netoperatingworkingcapital(NOWC):OperatingCA–OperatingCL=(Cash+Inv.+A/R)–(Accruals+A/P)(More…)Workingcapitalmanagement:Includesbothestablishingworkingcapitalpolicyandthentheday-to-daycontrolofcash,inventories,receivables,ac

3、cruals,andaccountspayable.Workingcapitalpolicy:Thelevelofeachcurrentasset.Howcurrentassetsarefinanced.SelectedRatiosforSKISKIIndustryCurrent1.75x2.25xQuick0.83x1.20xDebt/Assets58.76%50.00%Turnoverofcash16.67x22.22xDSO(365-daybasis)45.6332.00Inv.turnove

4、r4.82x7.00xF.A.turnover11.35x12.00xT.A.turnover2.08x3.00xProfitmargin2.07%3.50%ROE10.45%21.00%Payablesdeferral30.0033.00HowdoesSKI’sworkingcapitalpolicycomparewiththeindustry?Workingcapitalpolicyisreflectedinafirm’scurrentratio,quickratio,turnoverofcas

5、handsecurities,inventoryturnover,andDSO.TheseratiosindicateSKIhaslargeamountsofworkingcapitalrelativetoitslevelofsales.Thus,SKIisfollowingarelaxedpolicy.IsSKIinefficientorjustconservative?Arelaxedpolicymaybeappropriateifitreducesriskmorethanprofitabili

6、ty.However,SKIismuchlessprofitablethantheaveragefirmintheindustry.Thissuggeststhatthecompanyprobablyhasexcessiveworkingcapital.Thecashconversioncyclefocusesonthetimebetweenpaymentsmadeformaterialsandlaborandpaymentsreceivedfromsales:CashInventoryReceiv

7、ablesPayablesconversion=conversion+collection-deferral.cycleperiodperiodperiodCashConversionCycleCashConversionCycle(Cont.)CCC=+–CCC=+45.6–30CCC=75.7+45.6–30CCC=91.3days.DaysperyearInv.turnoverPayablesdeferralperiodDayssalesoutstanding3654.82CashManage

8、ment:Cashdoesn’tearninterest,sowhyholdit?Transactions:Musthavesomecashtopaycurrentbills.Precaution:“Safetystock.”Butlessenedbycreditlineandmarketablesecurities.Compensatingbalances:Forloansand/orservicesprovided.Speculation:Totakeadva