Chapter 9 Cash and marketable Securities Management 9-1
9-1 Chapter 9 Cash and Marketable Securities Management
Cash and Marketable Securities Management Motives for Holding Cash Speeding Up Cash Receipts S-l-o-W-i-n-g D-o-W-n Cash Payouts Electronic Commerce 9-2
9-2 Cash and Marketable Securities Management Motives for Holding Cash Speeding Up Cash Receipts S-l-o-w-i-n-g D-o-w-n Cash Payouts Electronic Commerce
Cash and Marketable Securities Management Outsourcing Cash Balances to maintain Investment in Marketable Securities 9-3
9-3 Cash and Marketable Securities Management Outsourcing Cash Balances to Maintain Investment in Marketable Securities
Motives for Holding Cash Transactions Motive a to meet payments arising in the ordinary course of business Speculative Motive a to take advantage of temporary opportunities Precautionary Motive- to maintain a cushion or buffer to meet unexpected cash needs 9-4
9-4 Motives for Holding Cash Transactions Motive -- to meet payments arising in the ordinary course of business Speculative Motive -- to take advantage of temporary opportunities Precautionary Motive -- to maintain a cushion or buffer to meet unexpected cash needs
Cash Management System Collections Disbursements Marketable securities investment Control through information reporting Funds flow +E Information flow 9-5
9-5 Cash Management System Collections Disbursements Marketable securities investment Control through information reporting = Funds Flow = Information Flow
Speeding Up Cash Receipts Collections Expedite preparing and mailing the Invoice Accelerate the mailing of payments from customers Reduce the time during which payments received by the firm remain uncollected 9-6
9-6 Speeding Up Cash Receipts Collections Expedite preparing and mailing the invoice Accelerate the mailing of payments from customers Reduce the time during which payments received by the firm remain uncollected
Collection loat Mail Processing Availability Float Float Float Deposit Float Collection Float: total time between the mailing i of the check by the customer and the availability of cash to the receiving firm 9-7
9-7 Collection Float Collection Float: total time between the mailing of the check by the customer and the availability of cash to the receiving firm. Processing Float Availability Float Mail Float Deposit Float
Mail float 之 Customer Firm mails check receives check Mail Float: time the check is in the mail 9-8
9-8 Mail Float Mail Float: time the check is in the mail. Customer mails check Firm receives check
Processing Float BOB JONES 2048 RT0 THE ORDER群 j5匚 ST NATIONAL B Firm Firm i receives check deposits check Processing float: time it takes a company to process the check internally 9-9
9-9 Processing Float Processing Float: time it takes a company to process the check internally. Firm deposits check Firm receives check
Availability Float BOB JONES 2048 RT0 THE ORDER饼 FIRST NATIONAL BAN 0D己oBB770■引BuO7B■己 Firm Firm's bank i deposits check account credited i Availability Float: time consumed in clearing i the check through the banking system. 9-10
9-10 Availability Float Availability Float: time consumed in clearing the check through the banking system. Firm deposits check Firm’s bank account credited