FIN2101 Business finance li
FIN2101 Business Finance II
Module 4 Working capital management (Week 1)
Module 4 Working Capital Management (Week 1)
Student Activities (Inventory) Reading a Text, Chapter 17(pp. 632-8 only) Text Study Guide, Chapter 17(part only Study book, Module 4.2(pp. 4.4 to 4.12) Tutorial Work Tutorial Workbook Self assessment activity 4.2 Text Study Guide, Chapter 17, T/F 7-10, MC 9& 11-15. Problems6.7.889
Student Activities (Inventory) Reading ◼ Text, Chapter 17 (pp. 632-8 only) ◼ Text Study Guide, Chapter 17 (part only) ◼ Study Book, Module 4.2 (pp. 4.4 to 4.12) Tutorial Work ◼ Tutorial Workbook, Self Assessment Activity 4.2 ◼ Text Study Guide, Chapter 17, T/F 7-10, MC 9 & 11-15, Problems 6, 7, 8 & 9
Student Activities( Cash Reading ■Text, Chapter16 Text study guide, Chapter 16 a Study Book, Module 4.3(pp 4.12 to 4.20) Tutorial Work a Tutorial Workbook, Self Assessment Activity 4.3 Text Study guide. Chapter 16
Student Activities (Cash) Reading ◼ Text, Chapter 16 ◼ Text Study Guide, Chapter 16 ◼ Study Book, Module 4.3 (pp. 4.12 to 4.20) Tutorial Work ◼ Tutorial Workbook, Self Assessment Activity 4.3 ◼ Text Study Guide, Chapter 16
Working capital management ■ Inventory Cash ■ Accounts receivable Integrated approach required
Working Capital Management ◼ Inventory ◼ Cash ◼ Accounts receivable ◼ Integrated approach required
Inventory Manufacturer raw materials work-in progress finished goods not sold Wholesaler/retailer goods in warehouse goods on shelves
Inventory ◼ Manufacturer - raw materials, work-inprogress, finished goods not sold. ◼ Wholesaler/retailer - goods in warehouse, goods on shelves
Objective a Balance the costs and benefits with the aim of CosT MINImIsation Inventories should be increased as long as the resulting savings exceed the total cost of holding the additional inventory
Objective ◼ Balance the costs and benefits with the aim of COST MINIMISATION. ◼ Inventories should be increased as long as the resulting savings exceed the total cost of holding the additional inventory
Inventory costs a Acquisition(ordering)costs Carrying(holding) costs ■ Stockout costs Generally there are carrying costs which increase with the size of the company's order quantity and acquisition costs which decrease with the size of the order quantity
Inventory Costs ◼ Acquisition (ordering) costs ◼ Carrying (holding) costs ◼ Stockout costs ◼ Generally, there are carrying costs which increase with the size of the company’s order quantity and acquisition costs which decrease with the size of the order quantity
Economic Order Quantit EOQ is the optimal order quantity for a particular inventory item, given its predicted usage, ordering cost and carrying cost
Economic Order Quantity EOQ is the optimal order quantity for a particular inventory item, given its predicted usage, ordering cost and carrying cost
EOQ Model assumptions Constant and certain demand No quantity discounts available ■ No lead time Constant ordering costs Constant carrying costs per unit of inventor
EOQ Model Assumptions ◼ Constant and certain demand ◼ No quantity discounts available ◼ No lead time ◼ Constant ordering costs ◼ Constant carrying costs per unit of inventory