Chapter 7 Financial assets Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 7 Financial Assets
How Much Cash Should a business Have? Every business needs enough cash to pay its bills Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill How Much Cash Should a Business Have? $ Every business needs enough cash to pay its bills!
How Much Cash Should a business Have? Financial Assets Cash Receivables Short-term Investments Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill How Much Cash Should a Business Have? Cash Short-term Investments Receivables Financial Assets
How Much Cash Should a business Have? Collections from Cash(and cash customers equivalents) Cash Accounts payments receivable 拘 Investments xcess ?cash are sold as is invested cash is temporarily. needed Marketable securities (short-term investments)」 Irwin/McGraz-Hill Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill How Much Cash Should a Business Have? Accounts receivable Marketable securities (short-term investments) Cash (and cash equivalents) Collections from customers Cash payments 揈 xcess?cash is invested temporarily. Investments are sold as cash is needed
The valuation of financial assets Basis for valuation in Type of Financial Asset the balance sheet Cash(and cash equivalents)Face amount Short-term investments Current market value (marketa ble securities Receivables Net realizable value Estimated collectible amount Irwin McGraw-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Valuation of Financial Assets Type of Financial Asset Basis for Valuation in the Balance Sheet Cash (and cash equivalents) Face amount Short-term investments (marketable securities) Current market value Receivables Net realizable value Estimated collectible amount
Cash Coins and paper Cash is Checks money defined as any deposit Bank credit banks will card sales Money orders accept Travelers?checks Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Cash Coins and paper money Checks Money orders Travelers?checks Bank credit card sales Cash is defined as any deposit banks will accept
Reporting Cash in the balance Sheet Combined with cash on balance sheet Liquid short- Cash Matures term within 90 days investments Equivalents of acquisition Stable market values Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Combined with cash on balance sheet Reporting Cash in the Balance Sheet Liquid shortterm investments Stable market values Matures within 90 days of acquisition Cash Equivalents
Reporting Cash in the balance Sheet Not available for paying current liabilities 挣 Not a current estricted?Ca Listed as an asset sh investment Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Not available for paying current liabilities Reporting Cash in the Balance Sheet Not a current asset Listed as an investment 揜 estricted?Ca sh
Reporting Cash in the balance Sheet Bank agrees in advance to lend money. Lines of Credit Liability is Unused line of incurred when use credit is disclosed line of credit in notes Irwin/McGraz-Hill ?The McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Bank agrees in advance to lend money. Reporting Cash in the Balance Sheet Liability is incurred when use line of credit. Unused line of credit is disclosed in notes. Lines of Credit
The Statement of Cash flows Statement of cash Flows larizes cash transactions for an accounting period. Includes cash and cash equivalents. Irwin/McGraz-Hill TThe McGraw-Hill Companies, Inc, 1999
?The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Statement of Cash Flows Summarizes cash transactions for an accounting period. Statement of Cash Flows Includes cash and cash equivalents