Chapter 16 Short-Term Financial Planning

Samples of shortage cost

(lack of) Safety reserve costs and Order Costs

What are the steps of the operating cycle in order?

1. Buying raw materials 2. Paying cash 3.Manufacturing the product 4.Sselling the product 5. Collecting cash

Payable manager deals with...

Accounts payable p. 523

The Balance Sheet identity says...

Net working capital plus Fixed assets equal Long-Term debt plus Equity

Which activities are primarily to short-term finance?

Operating activities and Financial activities.

The cash budget allows the firm or financial manager to identify....

Short term-term financial needs and Short-term opportunities.

Those activities that increase cash are called

Sources of cash

What is the relation decision for the activity or event "Manufacturing the product"?

What choice of production technology to use?

Cash manager deals with...

marketable securities, short term loans, and cash p. 523

If a firm has an inventory period of 100 days and an accounts receivable period of 42 days, then their operating cycle is ----- days.

142 days

If inventory is acquired on day 0 and paid for on day 40, and then product is sold and cash is collected for the sale on day 100, cash cycle equals ______ days.

60 days

Credit manager deals with...

Accounts receivable p.523

Purchasing Manager deals with...

Accounts receivable, inventory, accounts payable p.523

Net working capital formula

Current assets (cash and other current assets) - Current liabilities.

Short-term financing is primary concern with?

Current liabilities and current assets

Sources of cash can involve increasing a(n) ______ account.

Liability and equity

What is the relation decision for the activity or event "Selling the product"?

Should credit be extended?

What is the relation decision for the activity or event "Paying cash for purchases"?

Should money be borrowed or cash reserves used?

What is the relation decision for the activity or event "Buying raw materials"?

What is the desired level or inventory?

The cash cycle is equal to the operating cycle minus the ______ period.

accounts payable period