Click to edit Master title style

Management of
Short-term
Investments
1
Click to edit Master title style

2 2
Click to edit Master title style

3 3
Click to edit Master title style

4 4
Click to edit Master title style

Accounts Receivable
Management

5 5
Click to edit
Accounts Receivable
Master title
Management
style

• refers to the set of policies, procedures, and practices employed by

a company with respect to managing sales offered on credit.

• Objectives for Managing Accounts Receivable

1. Credit Selection and Standard
2. Credit Terms
3. Credit Monitoring

6 6
Click to SELECTION
CREDIT edit MasterAND
titleSTANDARDS
style

• Credit Standards - The firm’s minimum requirements for extending

credit to a customer.

Five C’s of Credit

• Character
• Capacity
• Capital
• Collateral
• Conditions

7 7
Click toScoring
Credit edit Master title style

• A credit selection method commonly used with high volume/small-

dollar credit requests; relies on a credit score determined by
applying statistically derived weights to a credit applicant’s scores
on key financial and credit characteristics

8 8
Click toTerms
Credit edit Master title style

• The terms of sale for customers who have been extended credit by
the firm.
• Cash Discount - a percentage deduction from the purchase price; available
to the credit customer who pays its account within a specified time.
• Cash Discount Period - the number of days after the beginning of the credit
period during which the cash discount is available.
• Credit Period - the number of days after the beginning of the credit period
until full payment of the account is due.

9 9
Click toMonitoring
Credit edit Master title style

• The ongoing review of a firm’s accounts receivable to determine

whether customers are paying according to the stated credit terms.

• Average Collection Period

1. The time from sale until the customer places the payment in the mail
2. The time to receive, process, and collect the payment once it has been
mailed by the customer.

10 10
Click to
Aging ofedit
Accounts
Master
Receivable
title style

• Aging Schedule - a credit-monitoring technique that breaks down

accounts receivable into groups on the basis of their time of origin; it
indicates the percentages of the total accounts receivable balance
that have been outstanding for specified periods of time

11 11
Click to edit Master title style

Short-term Financing
Sources

12 12
Click to edit Master title style

13 13
Click to edit Master title style

14 14
Click to edit Master title style

15 15
Click to edit Master title style

16 16
Click to edit Master title style

Inventory Management

17 17
Click to edit
Inventory Management
Master title style

• the process of ordering, storing and using a company's inventory:

raw materials, components and finished products.

18 18
Click to edit
COMMON TECHNIQUES
Master title
FOR
style
MANAGING INVENTORY

• ABC Inventory System - Inventory management technique that divides

inventory into three groups— A, B, and C, in descending order of importance
and level of monitoring, on the basis of the dollar investment in each.
• Two-Bin Method - Unsophisticated inventory monitoring technique that is
typically applied to C group items and involves reordering inventory when one of
two bins is empty.

19 19
Click to edit
Economic Order
Master
Quantity
title style
(EOQ) Model
• Inventory management technique for determining an item’s optimal order size,
which is the size that minimizes the total of its order costs and carrying costs.
• Order Costs - The fixed clerical costs of placing and receiving an inventory
order.
• Carrying Costs - The variable costs per unit of holding an item in inventory for
a specific period of time.
• The firm’s total cost of inventory is found by summing the order cost and the
carrying cost.

20 20
Click to edit
Economic Order
Master
Quantity
title style
(EOQ) Formula

Order cost = O x (S ÷ Q)
Carrying cost = C x (Q ÷ 2)
Total cost = [O x (S ÷ Q)] + [C x (Q ÷ 2)]

21 21
Click to edit Master title style
• Just-in-Time (JIT) System - Inventory management technique that
minimizes inventory investment by having materials arrive at exactly
the time they are needed for production.

22 22
Click to edit Master title style

23 23
Click to edit Master title style

24 24
Click to edit Master title style

25 25
Click to edit Master title style

Thank You

26
Click to edit Master title style

Thank You

27