FIN2101 Business finance li
FIN2101 Business Finance II
Module 4 Working capital management (Week 2)
Module 4 Working Capital Management (Week 2)
Student Activities(receivables) Reading Text, Chapter 17(pp. 616-31,633-4 only a Text Study Guide, Chapter 17(part only Study book, Module 4.4(pp. 4.20 to 4.26 Tutorial Activities a Tutorial workbook, Self Assessment Activity 4.3 Text Study Guide, Chapter 17, T/F 1-6, MC 1-8& 10, Problems 1 to 5
Student Activities (Receivables) Reading ◼ Text, Chapter 17 (pp. 616-31, 633-4 only) ◼ Text Study Guide, Chapter 17 (part only) ◼ Study Book, Module 4.4 (pp. 4.20 to 4.26) Tutorial Activities ◼ Tutorial Workbook, Self Assessment Activity 4.3 ◼ Text Study Guide, Chapter 17, T/F 1-6, MC 1-8 & 10, Problems 1 to 5
Student Activities(General) Reading Text, Chapter 15(pp. 544-9 only a Text Study Guide, Chapter 15(part only) Study book, Module 4.1(pp. 4.1 to 4.4 Tutorial Work a Tutorial workbook, Self Assessment Activity 4.1 Text Study Guide, Chapter 15, T/F 1 2, MC 1 Problem 1
Student Activities (General) Reading ◼ Text, Chapter 15 (pp. 544-9 only) ◼ Text Study Guide, Chapter 15 (part only) ◼ Study Book, Module 4.1 (pp. 4.1 to 4.4) Tutorial Work ◼ Tutorial Workbook, Self Assessment Activity 4.1 ◼ Text Study Guide, Chapter 15, T/F 1 & 2, MC 1-3, Problem 1
Credit Management Decisions ■ Do we grant credit ■Ifso, to whom? ■ On what terms? credit period cash discount discount period
Credit Management Decisions ◼ Do we grant credit? ◼ If so, to whom? ◼ On what terms? ◼credit period ◼cash discount ◼discount period
Credit management Obiectives a Maximise the probability of receipt ■ Accelerate receipt
Credit Management Objectives ◼ Maximise the probability of receipt ◼ Accelerate receipt
Costs of Granting Credit ■ Opportunity cost ■ Administration costs ■ Bad debts Additional inventory Discounted value of sale
Costs of Granting Credit ◼ Opportunity cost ◼ Administration costs ◼ Bad debts ◼ Additional inventory ◼ Discounted value of sale
Benefit of granting credit Additional sales
Benefit of Granting Credit Additional sales
Costs of not granting credit ■上 oregon sales Higher security costs Higher insurance costs Loss of customer goodwill
Costs of NOT Granting Credit ◼ Foregone sales ◼ Higher security costs ◼ Higher insurance costs ◼ Loss of customer goodwill
Benefits of not granting credit Accelerated cash flows No bad debts or delinquent accounts
Benefits of NOT Granting Credit ◼ Accelerated cash flows ◼ No bad debts or delinquent accounts