The document summarizes a presentation on cash management strategies during economic turmoil. It discusses building financial models, prior period analysis, cash requirements vs expenses, risk mitigation strategies, unforeseen events, and restructuring. Key points covered include rolling forecasts, financial statement analysis, identifying business drivers, covenant compliance, and developing 13-week cash flow projections during workouts.
SESSION ABSTRACT: Companies are moving to global presence and there are many ways in which they are hoping to manage in an efficient manner, and this creates problems because - processes need to change - and systems need to follow to support these process changes. The tools available today may not entirely support all that is needed - but what is available and what can be done ? This is what you will get from this session and open a conversation on how other people resolve these challenges.
This document discusses cash management strategies and models for determining optimal cash balances. It explains concepts like cash flows, cash conversion cycle, and motives for holding cash. It also outlines efficient cash management techniques like speeding up collections and delaying payments. Finally, it describes the Baumol and Miller-Orr models for calculating optimal cash balances based on factors like transaction costs, interest rates, and cash flow variances. The Miller-Orr model accounts for uncertain cash flows by setting upper and lower cash balance limits.
This document discusses cash management. It begins by defining cash management and its objectives of meeting payment schedules while minimizing cash balances. It then covers facets of cash management like cash planning, managing cash flows, optimal cash levels, and investing surplus cash. Analytical cash management models like the Baumol, Miller-Orr, and Orgler's models are also summarized. The document concludes with discussing motives for holding cash and types of money market and capital market securities.
The document discusses two models for cash budgeting and cash management: the Miller-Orr Model and the Orgler Model.
The Miller-Orr Model is developed for businesses with uncertain cash inflows and outflows. It allows for setting lower and upper cash balance limits and determining an optimal target cash balance. The model symbolically represents the total cash management costs as a function of conversion costs and expected cash balances.
The Orgler Model formulates cash management as a multiple linear programming problem. It uses four decision variables - payment schedules, short-term financing, purchase/sale of securities, and cash balances. The objective is to minimize net costs subject to constraints.
A cash budget is also discussed as
Topic 1 nature elements of working capitalRAJKAMAL282
Working capital refers to a firm's short-term assets and liabilities. It includes current assets like cash, inventory, and accounts receivable, as well as current liabilities like accounts payable. Effective working capital management balances liquidity and profitability by ensuring the business has enough cash flow to meet daily operations while maximizing returns. It is crucial for business success as mismanaging working capital can lead to insolvency or inability to take advantage of business opportunities.
Topic 3 tools techniques of managing of receivablesRAJKAMAL282
The document discusses various techniques for managing accounts receivable, including establishing a credit policy, assessing customer creditworthiness, setting credit limits, invoicing promptly and collecting overdue debts, and monitoring the accounts receivable system. It also describes invoice discounting and factoring as methods to speed up the receipt of funds from accounts receivable, outlining the key services provided by invoice discounters and factors as well as the advantages and disadvantages of each approach.
Topic 4 tools techniques of managing of payablesRAJKAMAL282
Accounts payable are amounts owed to suppliers that have not yet been paid. Managing accounts payable effectively requires balancing liquidity and profitability while maintaining good supplier relationships. Extending payment terms risks losing supplier discounts, damaging reputation, or requiring future payments to be made on a cash basis. Foreign accounts receivable and payable introduce additional risks like export credit risk if foreign customers do not pay, and foreign exchange risk if currency values change before payment is received. Businesses use various techniques to mitigate these risks, such as letters of credit, export credit insurance, and factoring of foreign accounts receivable.
SESSION ABSTRACT: Companies are moving to global presence and there are many ways in which they are hoping to manage in an efficient manner, and this creates problems because - processes need to change - and systems need to follow to support these process changes. The tools available today may not entirely support all that is needed - but what is available and what can be done ? This is what you will get from this session and open a conversation on how other people resolve these challenges.
This document discusses cash management strategies and models for determining optimal cash balances. It explains concepts like cash flows, cash conversion cycle, and motives for holding cash. It also outlines efficient cash management techniques like speeding up collections and delaying payments. Finally, it describes the Baumol and Miller-Orr models for calculating optimal cash balances based on factors like transaction costs, interest rates, and cash flow variances. The Miller-Orr model accounts for uncertain cash flows by setting upper and lower cash balance limits.
This document discusses cash management. It begins by defining cash management and its objectives of meeting payment schedules while minimizing cash balances. It then covers facets of cash management like cash planning, managing cash flows, optimal cash levels, and investing surplus cash. Analytical cash management models like the Baumol, Miller-Orr, and Orgler's models are also summarized. The document concludes with discussing motives for holding cash and types of money market and capital market securities.
The document discusses two models for cash budgeting and cash management: the Miller-Orr Model and the Orgler Model.
The Miller-Orr Model is developed for businesses with uncertain cash inflows and outflows. It allows for setting lower and upper cash balance limits and determining an optimal target cash balance. The model symbolically represents the total cash management costs as a function of conversion costs and expected cash balances.
The Orgler Model formulates cash management as a multiple linear programming problem. It uses four decision variables - payment schedules, short-term financing, purchase/sale of securities, and cash balances. The objective is to minimize net costs subject to constraints.
A cash budget is also discussed as
Topic 1 nature elements of working capitalRAJKAMAL282
Working capital refers to a firm's short-term assets and liabilities. It includes current assets like cash, inventory, and accounts receivable, as well as current liabilities like accounts payable. Effective working capital management balances liquidity and profitability by ensuring the business has enough cash flow to meet daily operations while maximizing returns. It is crucial for business success as mismanaging working capital can lead to insolvency or inability to take advantage of business opportunities.
Topic 3 tools techniques of managing of receivablesRAJKAMAL282
The document discusses various techniques for managing accounts receivable, including establishing a credit policy, assessing customer creditworthiness, setting credit limits, invoicing promptly and collecting overdue debts, and monitoring the accounts receivable system. It also describes invoice discounting and factoring as methods to speed up the receipt of funds from accounts receivable, outlining the key services provided by invoice discounters and factors as well as the advantages and disadvantages of each approach.
Topic 4 tools techniques of managing of payablesRAJKAMAL282
Accounts payable are amounts owed to suppliers that have not yet been paid. Managing accounts payable effectively requires balancing liquidity and profitability while maintaining good supplier relationships. Extending payment terms risks losing supplier discounts, damaging reputation, or requiring future payments to be made on a cash basis. Foreign accounts receivable and payable introduce additional risks like export credit risk if foreign customers do not pay, and foreign exchange risk if currency values change before payment is received. Businesses use various techniques to mitigate these risks, such as letters of credit, export credit insurance, and factoring of foreign accounts receivable.
This document discusses cash management strategies for businesses. It describes cash as a medium of exchange that includes notes, coins, checks, and bank deposits. It then outlines strategies for managing cash flow, including:
1) Preparing cash budgets and using concentration banking to quickly collect and deposit receipts across collection centers.
2) Implementing lockbox collections where local banks directly deposit receipts to reduce clearance time.
3) Accelerating collections, delaying payments to the due date, and using floats to the firm's advantage to maximize available cash.
The document discusses the working capital cycle, which measures how quickly a business can convert current assets like inventory and accounts receivable into cash. It explains the typical steps in the working capital cycle as inventory days, receivable days, and payable days. The working capital cycle formula is given as inventory days + receivable days - payable days. An example calculation is provided. The document also discusses strategies for managing working capital, including aggressive versus conservative approaches and sources of working capital financing.
Topic 2 tools techniques of managing of inventoriesRAJKAMAL282
This document defines key terms related to inventory management, accounts receivable, accounts payable, and cash. It discusses the cash operating cycle and how it reflects a firm's investment in working capital. Key aspects of the operating cycle include raw materials, work in progress, finished goods, and receivables collection periods. Relevant accounting ratios for analyzing financial statements like the current ratio and quick ratio are also defined. Inventory management techniques are mentioned.
Topic 5 tools techniques of managing of cashRAJKAMAL282
The document discusses tools and techniques for managing cash, including:
- The three motives for holding cash: transactions, precautionary, and speculative.
- Cash management models like the Baumol and Miller-Orr models that aim to minimize costs of cash movements.
- Preparing cash flow forecasts from receipts/payments, statements of financial position, or working capital ratios.
- Short-term investment options for surplus cash and sources of short-term borrowing.
The document provides an overview of cash management for governments. It defines cash management, its objectives and importance. It discusses components of an effective cash management program including policies, organization, banking relationships, receipts/deposits, disbursements and cash flow forecasting. It also covers treasury single accounts, debt and investment policies, and managing cash inflows and outflows through forecasting.
Basics of cash management for financial management & reportingSoaga Hameed Gbola
This paper examines the basics of cash management for financial management and financial reporting purposes. This study makes use of descriptive research method to examine the importance, essence, influence, relationship, and impact of cash management on financial management and financial reporting. It establishes the strong impact of cash management on corporate survival, linkage to practically every account on financial report, maximisation of shareholders’ wealth, fraud prevention and detection, and liquidity enrichment. It also ascertains the need for the use of net cash flows as a measure of performance. Organisations should give cash management serious attention and make it a strategic partner, and should maintain a dedicated cash module for cash management because accrual accounting is not adequate for cash management. Regulatory bodies should enhance disclosure requirements in respect of cash and cash equivalents to enhance transparency and prevent creative cash management.
The firm’s level of aggregate liquidityFatima Khan
This document discusses various methods to measure a firm's aggregate liquidity or ability to meet short-term obligations. It describes traditional ratios like the current ratio, quick ratio, and inventory/accounts receivable turnover ratios. However, these can provide conflicting signals. Improved measures like the cash conversion cycle (CCC), comprehensive liquidity index (CLI), net liquid balance (NLB), and Lambda index aim to provide a more comprehensive picture of a firm's short-term financial position and flexibility. The CCC considers the time to sell inventory, collect receivables, and pay bills. The CLI and NLB assess ability to convert assets into cash. The Lambda index incorporates expected cash flows and uncertainty.
This document discusses various aspects of cash management, including:
1. It describes short-term and long-term cash forecasting methods like the receipt and disbursement method and adjusted net income method.
2. It discusses facets of cash management like cash planning, managing cash flows, optimal cash levels, and investing surplus cash.
3. It presents two cash management models - Baumol's inventory model which determines optimal cash balance under certainty, and Miller-Orr's stochastic model which allows for variation in daily cash flows.
The document discusses various financial management and internal control procedures for districts receiving federal grants, including cash management, inventory, budgeting, procurement, payroll, timekeeping, and accounting practices. Key points addressed include maintaining proper documentation for expenditures and obligations, separating duties for authorizing payments and reviewing cash receipts, identifying federal funds in accounting systems, and ensuring expenditures are allowable and within budget.
This document discusses cash management. It defines cash and describes the goals of cash management as managing cash flows, maintaining optimal cash balances, and investing surplus cash. It outlines factors that influence a firm's cash holdings such as transaction, precautionary, and speculative motives. Methods of cash forecasting and models for determining optimal cash balances are presented, including the Baumol and Miller-Orr models. Techniques for accelerating cash collections and controlling disbursements are also summarized.
Cash is the lifeblood of every business.
Cash is the most liquid current asset a firm can hold
Efficient cash management helps the company to remain healthy and strong.
Poor cash management, may end up pushing the company to a crisis.
This document discusses managing cash flows through working capital management. It covers cash inflows and outflows, objectives of cash management, reasons for holding cash and marketable securities, types of money market instruments, and strategies for reducing delays in receiving funds such as lockboxes and electronic collection procedures. The optimal lockbox solution minimizes total costs, which is the sum of opportunity costs of float and lockbox costs. Larger companies may use algorithms to determine the optimal number and locations of lockboxes.
Accounts receivable and inventory managementluburtusi
This document discusses key aspects of accounts receivable management, credit analysis, and inventory control. It addresses setting credit policies, analyzing credit applicants, managing the billing and collection process, and following up on overdue accounts. It also outlines the five C's model for credit analysis - character, capacity, capital, collateral, and conditions. Finally, it discusses techniques for inventory control like ABC analysis, economic order quantity models, reorder points, and just-in-time systems. Effective accounts receivable and inventory management requires cooperation across sales, finance, accounting, and other functions.
Cash is the most important current asset for business operations and a major function of financial managers is to maintain a sound cash position. Cash management involves managing cash flows into and out of the firm, within the firm, and cash balances. The aim of cash management is to maintain adequate liquidity while using excess cash profitably. Effective cash management requires optimizing operating cash flows, accurate cash forecasting, utilizing cash management techniques, maintaining liquidity, profitably deploying surplus funds, and obtaining economical borrowings.
Cash management- Need, Motives, Models of Cash Management, Boumol Model, Mill...Dr. Toran Lal Verma
Cash management involves determining the optimal level of cash a business should hold. Several factors influence cash levels, including the nature of the business, credit terms, and economic conditions. Two common models for determining optimal cash levels are the Boumol and Miller-Orr models, which aim to minimize holding and transaction costs. Effective cash forecasting and collection techniques, like cash budgets and lockbox systems, also help businesses manage cash flows and working capital requirements.
Cash management is important for working capital management. There are four motives for holding cash: transaction, precautionary, speculative, and compensating. The objectives of cash management are to meet payment schedules and minimize idle cash balances. Cash needs depend on the synchronization of cash inflows and outflows. Forecasting cash flows helps anticipate surplus or deficit periods to avoid issues like late payments or idle surplus cash. Cash can be forecast over different time periods using receipts/disbursements or adjusted net income approaches.
Cash and marketable securities managementNikhil Soares
Cash management and marketable securities are key areas of working capital management. Cash is held for transactional, precautionary and speculative motives to meet routine payments and unexpected needs. The objectives of cash management are to meet payment schedules while minimizing idle cash balances. Factors determining cash needs include synchronizing cash inflows and outflows, costs of shortfalls, and excess cash balances. Marketable securities alternatives that provide liquidity include treasury bills, commercial paper, certificates of deposit, bankers' acceptances, money market funds and intercorporate deposits.
This document discusses working capital management. It defines working capital as the excess of current assets over current liabilities, representing the liquidity available for daily operations. It also discusses key aspects of working capital including current assets and liabilities, operating cycle, and cash flow requirements. The document emphasizes that working capital management aims to maximize shareholder wealth through decisions that influence firm cash flows and addresses risk.
This document discusses the different motives for holding cash in a business, including the transaction motive, precautionary motive, and speculative motive. The transaction motive refers to needing cash for day-to-day operations like purchases, expenses, taxes, and dividends. The precautionary motive means holding cash in reserve for contingencies like floods, strikes, slow collections, or increases in costs. The speculative motive refers to holding cash for investing in profitable opportunities as they arise, such as anticipated price declines or interest rate changes.
The document discusses cash management in organizations. It defines cash and liquidity, and explains the objectives and motives for cash management, which include transaction, precautionary, and speculative motives. It also outlines techniques for accelerating cash collections and controlling cash disbursements, such as using a decentralized collection or lockbox system. Finally, it lists factors that influence how much cash a firm should hold, including liquidity needs, investment opportunities, and transaction costs.
This document discusses two cash management models: William J. Baumol's inventory model and M. H. Miller and Daniel Orr’s stochastic model. Baumol's model determines optimal cash balance by minimizing holding and transaction costs under certainty. Miller and Orr's model accounts for stochastic cash flows by setting upper and lower control limits for cash balances and buying/selling securities as needed. Both models aim to help companies manage cash balances efficiently.
The document discusses cash management strategies including cash collection, concentration, and disbursement. It describes factors that impact the optimal cash balance such as opportunity costs, trading costs, and variability of cash flows. The Baumol and Miller-Orr models provide methods for determining the target cash balance that minimizes total costs given interest rates and cash flow volatility. The implications are that the target balance increases with trading costs and decreases with interest rates, and is positively related to variability in cash flows.
This document discusses cash management strategies for businesses. It describes cash as a medium of exchange that includes notes, coins, checks, and bank deposits. It then outlines strategies for managing cash flow, including:
1) Preparing cash budgets and using concentration banking to quickly collect and deposit receipts across collection centers.
2) Implementing lockbox collections where local banks directly deposit receipts to reduce clearance time.
3) Accelerating collections, delaying payments to the due date, and using floats to the firm's advantage to maximize available cash.
The document discusses the working capital cycle, which measures how quickly a business can convert current assets like inventory and accounts receivable into cash. It explains the typical steps in the working capital cycle as inventory days, receivable days, and payable days. The working capital cycle formula is given as inventory days + receivable days - payable days. An example calculation is provided. The document also discusses strategies for managing working capital, including aggressive versus conservative approaches and sources of working capital financing.
Topic 2 tools techniques of managing of inventoriesRAJKAMAL282
This document defines key terms related to inventory management, accounts receivable, accounts payable, and cash. It discusses the cash operating cycle and how it reflects a firm's investment in working capital. Key aspects of the operating cycle include raw materials, work in progress, finished goods, and receivables collection periods. Relevant accounting ratios for analyzing financial statements like the current ratio and quick ratio are also defined. Inventory management techniques are mentioned.
Topic 5 tools techniques of managing of cashRAJKAMAL282
The document discusses tools and techniques for managing cash, including:
- The three motives for holding cash: transactions, precautionary, and speculative.
- Cash management models like the Baumol and Miller-Orr models that aim to minimize costs of cash movements.
- Preparing cash flow forecasts from receipts/payments, statements of financial position, or working capital ratios.
- Short-term investment options for surplus cash and sources of short-term borrowing.
The document provides an overview of cash management for governments. It defines cash management, its objectives and importance. It discusses components of an effective cash management program including policies, organization, banking relationships, receipts/deposits, disbursements and cash flow forecasting. It also covers treasury single accounts, debt and investment policies, and managing cash inflows and outflows through forecasting.
Basics of cash management for financial management & reportingSoaga Hameed Gbola
This paper examines the basics of cash management for financial management and financial reporting purposes. This study makes use of descriptive research method to examine the importance, essence, influence, relationship, and impact of cash management on financial management and financial reporting. It establishes the strong impact of cash management on corporate survival, linkage to practically every account on financial report, maximisation of shareholders’ wealth, fraud prevention and detection, and liquidity enrichment. It also ascertains the need for the use of net cash flows as a measure of performance. Organisations should give cash management serious attention and make it a strategic partner, and should maintain a dedicated cash module for cash management because accrual accounting is not adequate for cash management. Regulatory bodies should enhance disclosure requirements in respect of cash and cash equivalents to enhance transparency and prevent creative cash management.
The firm’s level of aggregate liquidityFatima Khan
This document discusses various methods to measure a firm's aggregate liquidity or ability to meet short-term obligations. It describes traditional ratios like the current ratio, quick ratio, and inventory/accounts receivable turnover ratios. However, these can provide conflicting signals. Improved measures like the cash conversion cycle (CCC), comprehensive liquidity index (CLI), net liquid balance (NLB), and Lambda index aim to provide a more comprehensive picture of a firm's short-term financial position and flexibility. The CCC considers the time to sell inventory, collect receivables, and pay bills. The CLI and NLB assess ability to convert assets into cash. The Lambda index incorporates expected cash flows and uncertainty.
This document discusses various aspects of cash management, including:
1. It describes short-term and long-term cash forecasting methods like the receipt and disbursement method and adjusted net income method.
2. It discusses facets of cash management like cash planning, managing cash flows, optimal cash levels, and investing surplus cash.
3. It presents two cash management models - Baumol's inventory model which determines optimal cash balance under certainty, and Miller-Orr's stochastic model which allows for variation in daily cash flows.
The document discusses various financial management and internal control procedures for districts receiving federal grants, including cash management, inventory, budgeting, procurement, payroll, timekeeping, and accounting practices. Key points addressed include maintaining proper documentation for expenditures and obligations, separating duties for authorizing payments and reviewing cash receipts, identifying federal funds in accounting systems, and ensuring expenditures are allowable and within budget.
This document discusses cash management. It defines cash and describes the goals of cash management as managing cash flows, maintaining optimal cash balances, and investing surplus cash. It outlines factors that influence a firm's cash holdings such as transaction, precautionary, and speculative motives. Methods of cash forecasting and models for determining optimal cash balances are presented, including the Baumol and Miller-Orr models. Techniques for accelerating cash collections and controlling disbursements are also summarized.
Cash is the lifeblood of every business.
Cash is the most liquid current asset a firm can hold
Efficient cash management helps the company to remain healthy and strong.
Poor cash management, may end up pushing the company to a crisis.
This document discusses managing cash flows through working capital management. It covers cash inflows and outflows, objectives of cash management, reasons for holding cash and marketable securities, types of money market instruments, and strategies for reducing delays in receiving funds such as lockboxes and electronic collection procedures. The optimal lockbox solution minimizes total costs, which is the sum of opportunity costs of float and lockbox costs. Larger companies may use algorithms to determine the optimal number and locations of lockboxes.
Accounts receivable and inventory managementluburtusi
This document discusses key aspects of accounts receivable management, credit analysis, and inventory control. It addresses setting credit policies, analyzing credit applicants, managing the billing and collection process, and following up on overdue accounts. It also outlines the five C's model for credit analysis - character, capacity, capital, collateral, and conditions. Finally, it discusses techniques for inventory control like ABC analysis, economic order quantity models, reorder points, and just-in-time systems. Effective accounts receivable and inventory management requires cooperation across sales, finance, accounting, and other functions.
Cash is the most important current asset for business operations and a major function of financial managers is to maintain a sound cash position. Cash management involves managing cash flows into and out of the firm, within the firm, and cash balances. The aim of cash management is to maintain adequate liquidity while using excess cash profitably. Effective cash management requires optimizing operating cash flows, accurate cash forecasting, utilizing cash management techniques, maintaining liquidity, profitably deploying surplus funds, and obtaining economical borrowings.
Cash management- Need, Motives, Models of Cash Management, Boumol Model, Mill...Dr. Toran Lal Verma
Cash management involves determining the optimal level of cash a business should hold. Several factors influence cash levels, including the nature of the business, credit terms, and economic conditions. Two common models for determining optimal cash levels are the Boumol and Miller-Orr models, which aim to minimize holding and transaction costs. Effective cash forecasting and collection techniques, like cash budgets and lockbox systems, also help businesses manage cash flows and working capital requirements.
Cash management is important for working capital management. There are four motives for holding cash: transaction, precautionary, speculative, and compensating. The objectives of cash management are to meet payment schedules and minimize idle cash balances. Cash needs depend on the synchronization of cash inflows and outflows. Forecasting cash flows helps anticipate surplus or deficit periods to avoid issues like late payments or idle surplus cash. Cash can be forecast over different time periods using receipts/disbursements or adjusted net income approaches.
Cash and marketable securities managementNikhil Soares
Cash management and marketable securities are key areas of working capital management. Cash is held for transactional, precautionary and speculative motives to meet routine payments and unexpected needs. The objectives of cash management are to meet payment schedules while minimizing idle cash balances. Factors determining cash needs include synchronizing cash inflows and outflows, costs of shortfalls, and excess cash balances. Marketable securities alternatives that provide liquidity include treasury bills, commercial paper, certificates of deposit, bankers' acceptances, money market funds and intercorporate deposits.
This document discusses working capital management. It defines working capital as the excess of current assets over current liabilities, representing the liquidity available for daily operations. It also discusses key aspects of working capital including current assets and liabilities, operating cycle, and cash flow requirements. The document emphasizes that working capital management aims to maximize shareholder wealth through decisions that influence firm cash flows and addresses risk.
This document discusses the different motives for holding cash in a business, including the transaction motive, precautionary motive, and speculative motive. The transaction motive refers to needing cash for day-to-day operations like purchases, expenses, taxes, and dividends. The precautionary motive means holding cash in reserve for contingencies like floods, strikes, slow collections, or increases in costs. The speculative motive refers to holding cash for investing in profitable opportunities as they arise, such as anticipated price declines or interest rate changes.
The document discusses cash management in organizations. It defines cash and liquidity, and explains the objectives and motives for cash management, which include transaction, precautionary, and speculative motives. It also outlines techniques for accelerating cash collections and controlling cash disbursements, such as using a decentralized collection or lockbox system. Finally, it lists factors that influence how much cash a firm should hold, including liquidity needs, investment opportunities, and transaction costs.
This document discusses two cash management models: William J. Baumol's inventory model and M. H. Miller and Daniel Orr’s stochastic model. Baumol's model determines optimal cash balance by minimizing holding and transaction costs under certainty. Miller and Orr's model accounts for stochastic cash flows by setting upper and lower control limits for cash balances and buying/selling securities as needed. Both models aim to help companies manage cash balances efficiently.
The document discusses cash management strategies including cash collection, concentration, and disbursement. It describes factors that impact the optimal cash balance such as opportunity costs, trading costs, and variability of cash flows. The Baumol and Miller-Orr models provide methods for determining the target cash balance that minimizes total costs given interest rates and cash flow volatility. The implications are that the target balance increases with trading costs and decreases with interest rates, and is positively related to variability in cash flows.
The document discusses cash and cash management. It outlines the objectives of cash management as efficient collection and disbursement of cash and temporary investment of surplus cash. It discusses motives for holding cash such as transaction needs, speculative needs, and precautionary needs. Methods of preparing a cash budget and controlling cash flows are also covered. Cash management models like the Baumol model and Miller-Orr model are explained. Finally, various money market investment options for surplus funds are listed.
Working capital refers to the capital required to finance short-term operating expenses like inventory, accounts receivable, and other current assets. It is the difference between current assets and current liabilities and provides funds for day-to-day business operations. There are two main concepts of working capital - the balance sheet concept and operating cycle concept. Firms must determine the optimal level of working capital to balance the costs of holding too much or too little. Tools like economic order quantity, reorder points, and inventory classifications help firms manage working capital levels.
The document discusses cash management. It defines cash and describes cash management as managing cash flows in and out of a firm, within a firm, and cash balances. There are four facets of cash management: cash planning, managing cash flows, optimal cash level, and investing surplus cash. Firms hold cash for transaction, precautionary, speculative, and compensating motives. The objectives of cash management are to meet payment schedules and minimize idle cash. Methods to manage cash include accelerating collections and controlling disbursements. The Baumol and Miller-Orr models provide frameworks for determining optimal cash levels.
This document discusses the management of cash. It begins by defining cash and its importance as the most liquid asset. It then discusses determining the optimal cash balance, collecting cash efficiently from receivables, and disbursing cash payments in a timely manner. The document outlines various motives for holding cash like transaction, precautionary and speculative motives. It also discusses objectives of cash management like maintaining an optimal cash balance.
HLEG thematic workshop on measuring economic, social and environmental resili...StatsCommunications
1) A resilient financial system is one that can adapt dynamically to major changes while continuing to function in a modified way.
2) To measure resilience for policy assessment, quantitative scores are needed to evaluate policies both before and after implementation.
3) Measuring resilience in practice involves defining the components and characteristics of resilience for each sector and the overall system, and creating composite indicators from relevant data sources.
This document repeats the same information over 10 lines: it discusses a project evaluation of NHSO conducted by Dr. Danai Thieanphut and was copyrighted by DNT Consultants Co., Ltd. in 2009.
The document discusses various payment methods and cash management concepts. It provides an overview of immediate and delayed settlement systems, including examples like the Fedwire and Automated Clearing House (ACH) systems. Details are given on transaction types, advantages and disadvantages of different payment methods, and concepts like clearing and settlement. The document also includes a case study on a company reviewing its cash management systems and payment processes.
This document discusses how information and communication technologies (ICT) can positively impact economic development in Nigeria. It notes that while Nigeria has experienced strong GDP growth, this growth has not benefited most of its population who face high unemployment and poverty. The document argues that ICT can be leveraged to create jobs, drive entrepreneurship, and increase access to services. It provides examples of how digital technologies have spurred economic activity in other sectors like health and agriculture. Overall, the document advocates that e-government and ICT strategies can serve as catalysts for sustainable and inclusive economic development if properly implemented in Nigeria.
Working Capital Management And Cash Flow Analysis 06.07Ketoki
Working capital management and cash flow analysis are important for business success. Working capital is the time between investing in business assets and receiving payment, and measures current assets versus current liabilities. Managing working capital efficiently balances inflows and outflows to maximize liquidity. Cash flow looks at the timing of money in and out of the business from operations, investing and financing activities. Monitoring cash flows helps ensure solvency and adequate cash levels through analyzing components like receivables, payables and inventory levels.
The document discusses project evaluation and recycling. It provides information on key concepts related to monitoring, evaluation, and the project life cycle. Some main points:
- Monitoring is the routine collection and use of data to assess progress towards objectives. Evaluation assesses activities designed to achieve tasks in a specified period of time.
- There are different types of evaluation that can be done at various stages, including formative, summative, and impact evaluations. Internal evaluations are done by project staff while external evaluations involve outside parties.
- Effective evaluation assesses outcomes, impacts, efficiency, effectiveness, and relevance. It utilizes tools like reports, surveys, and reviews. The results are then used to update project plans and determine
Growth, Gender, Poverty and Environment Issues in Asia-PacificUNDP Policy Centre
This document provides an outline for a training module on integrating gender considerations into economic policymaking related to growth, poverty, and the environment in Asia and the Pacific. The module aims to strengthen understanding of intersections between these issues and enable participants to evaluate policies and their impacts on gender equality. It proposes analyzing existing inequalities, conceptual frameworks for change, and case studies of policies that achieve desired outcomes. Exercises could involve making policies more inclusive or adaptive to climate change. The module seeks feedback on how to address key issues and reflect specific country contexts to best support policy reforms.
The document provides tips for small businesses to improve cash flow management. It recommends extending payment terms and improving cash collection. It also suggests analyzing expenditures and forecasting cash flow regularly. Some key tips include keeping only key suppliers, paying suppliers on time, offering discounts for early payment, pursuing outstanding debts weekly, and ending relationships with customers with poor payment histories. The document stresses the importance of forecasting cash flow at least weekly and reviewing forecasts against bank statements to improve over time.
The document contains evaluations from 4 students of a project involving the creation of a website and dictionary about parapsychology terms. The students note their roles in creating the website and dictionary, including correcting materials, formatting presentations, and changing file formats, and express satisfaction with the final products despite facing some technical issues during development. In general, the students felt they learned new skills and vocabulary through their work on the project.
Cash management involves managing a firm's cash flows, balances, and converting surpluses and deficits. It aims to maintain enough cash for transactions while maximizing returns on excess cash. The Miller-Orr model sets upper and lower control limits for cash balances and a return point to buy or sell securities if balances exceed the limits. Firms can accelerate cash collections through decentralized collection centers and lockboxes, and manage disbursements by controlling payment float. Surplus cash can be invested in safe, liquid securities like treasury bills, commercial paper, and certificates of deposit.
Evaluation is an important part of any project that helps check progress, collect necessary information for final reports, and learn lessons for future projects. It involves reviewing project goals, collecting both quantitative and qualitative information through methods like questionnaires, interviews and feedback forms, analyzing the findings including identifying strengths, weaknesses, problems and evidence, and sharing results with relevant stakeholders. Developing and following an evaluation plan from the beginning of a project is crucial for ensuring success.
This presentation summarizes the FinanceSuite Cash & Liquidity Management solution. It provides global cash visibility and optimization through features like cash pooling, forecasting, and automated cash management processes. The solution also automates liquidity planning through flexible modeling and automatic retrieval of data from SAP modules. Key benefits include increased transparency, accuracy of forecasting, and reduced manual effort through integration with the customer's SAP environment.
This document provides an overview of basic financial accounting concepts. It defines key accounting terms like accounts, accounting, the accounting cycle and basis. It describes the different types of accounts, rules of double entry system and branches of accounting. It also explains the accounting process including journal, ledger, trial balance and errors. The accounting concepts, conventions and terminology are introduced along with the different books of accounts used.
This document provides an overview of a presentation on cash management strategies during economic turmoil. The presentation covers topics such as rolling forecasts, financial modeling, prior period analysis, cash requirements versus expenses, risk mitigation strategies, workouts and restructuring, and key terms. It includes an agenda with subtopics and brief explanations of some of the subtopics to be discussed.
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Using Financial Forecasts to Advise Business - Financial Forecasting 101 - Re...Irma Miller
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Treasury as a business partner and strategist can add significant value to wo...CashPerform Ltd
Treasury functions can act as a business pertner to functions like accounts, sales and procurement so as to add real value to to optimising working capital.
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The document outlines an agenda for a startup leadership program on financial modeling. It includes presentations on what a financial model is, how to build an income statement, balance sheet, and cash flow statement. It discusses how financial models are useful for entrepreneurs and startups by providing an analytical lens, operating roadmap, risk assessment, scenario exploration, and as a pitch tool for investors. The document also covers best practices for model construction and common business metrics and economic indicators analyzed in financial models.
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Cash Management Strategies During Economic Turmoil Aicpa
1. Cash Management Strategies
During Economic Turmoil!
Presented by
Robert Tormey, CPA, CTP
AICPA Controllers Workshop West 2009
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2. Cash Management Strategies
The Rolling Forecast and Your Closing Calendar
Building the Financial Model
Prior Period Analysis
Cash Requirements vs. Expenses
Basics of Your Model – What Stakeholders Expect
Risk Mitigation Strategies & Unforeseen Events
Workout and Restructuring
Glossary of Terms (5)
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3. Cash Management Strategies
Preparing for the Seminar
Review this Power Point in entirety prior the seminar.
Review the Glossary of Terms beginning on Page 18.
Review “Model 9-28 Deal” in pdf. Understand the
structure and elements of the model. Print it out. We will
refer to the model in the seminar.
Prepare your questions as seminar will be interactive.
Begin applying these ideas in your current environment.
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4. Cash Management Strategies
The Rolling Forecast and Your Closing Calendar
Controller must drive predictability of the company‟s
earnings process, i.e. realization of its budget.
Rolling Forecast - a part of the monthly close process
Forecast is not Budget but a comprehensive revisiting
of all major budget assumptions for P&L purposes
and an extrapolation of all Balance Sheet trends.
Numerous issues mature during the operating year
that Budget process could only „assume‟.
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5. Cash Management Strategies
Forecasts differ from budget because of changes in:
Insurance Renewals and Expirations, Headcount,
Facilities Leases and Expirations, Progress on
Initiatives, Regulatory Licenses, New Products and
SKU Rationalization, Customer Gains and Losses,
Variability of Commodity Prices, Interest rates, Credit
Conditions, Union Agreements, Price changes,
Balance Sheet Changes, Accounting Pronouncements, Pension
Gains, Losses and Actuarial Assumptions, Regulatory Setbacks,
Litigation, and Professional Fees issues, and on and on and on.
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6. Cash Management Strategies
Building the Financial Model
Creating the Time
Reduce Time in the Closing Process (5 Days max!)
Automate Bank Reconciliations (often a time sink!)
Simplify, Automate, Recurring and Reversing, Estimates, etc.
„Analyzing‟ accruals vs. Rolling Forecast – prioritize!
Finding the talent or the product
Excel – Power User with Analytical/Operational Orientation
Outsourcing to local advisor
Software Products – Some good, may be cumbersome.
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7. Cash Management Strategies
Prior Period Analysis
36 months of Trial balances (Chart of Accounts detail)
Trend Studies and Ratio Analyses
Income Statements
Balance Sheets
Statements of Cash Flows
Identify Drivers and Relationships
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8. Cash Management Strategies
Prior Period Analysis
Income Statement and Balance Sheet Drivers
Use Income Statements to:
First Model business on an accrual basis-
Identify key relationships and ratio‟s between
Revenues and COGS
Sales and Accounts Receivable Build
Inventory Build and Accounts Payable
Other Expenses and Pacing
Seasonal Relationships
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9. Cash Management Strategies
Cash Requirements vs. Expenses
Analyze Balance Sheet and Statement of Cash Flows
to determine what‟s happening on a CASH basis:
Borrowing Base Issues
Debt Amortization
Operating Plan of Company
Pacing of Inventory Build (if seasonal)
ASO and DPO relationships
Capital Expenditures
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10. Cash Management Strategies
Basics of Your Model – What Stakeholders Expect
Actual and Projected ( rolling 12 month horizon) -
Income Statements – Budget to Actual
Balance Sheets
Statement of Cash Flows
Covenant Compliance Tests, Compliance Certificates
Graphics Package
Cash and Borrowing Availability
Management Discussion and Analysis
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11. Cash Management Strategies
Risk Mitigation Strategies:
Forecast - Primary Risk Management Tool
Encourages management/stakeholders to take action.
Running out of Cash is not the disease.
Symptom of issues in the business to address.
Forecast acts as basis for involvement of
management, equity, lenders and outside
professionals on a timely basis.
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12. Cash Management Strategies
Risk Mitigation Strategies- Problems and Solutions:
Accounts Receivable – Collections, Credit Insurance,
Credit Analysis, Outside collections firm.
Concentration Risks – Customer Diversification.
Declining Margins – SKU Rationalization, Customer
Profitability studies, Mix issues in Sales, Price increases,
Vendor and purchasing initiatives, plant rationalization.
Continuing Losses or Variances from Plan – Cost
Reduction, Four Wall Analyses of Retail outlets,
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13. Cash Management Strategies
Risk Mitigation Strategies- Problem And Solutions:
Growth in Inventories – Reduce Purchases/Production,
“Just in Time with Vendors, Vendor Managed Inventory
Discipline, Purchasing Manager, Review Operating Plan.
Returns and Allowances – Review Quality Control with
Operations, Return Policies with Sales Force, Check for
„Channel Stuffing‟ or Commission Abuse.
Vendor Terms – Exhaust Terms Opportunities with
Vendors to Raise Needed Cash.
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14. Cash Management Strategies
Risk Mitigation Strategies- Problem And Solutions:
Expense Control - Cost Containment initiatives in
Travel, Telephony, Merchant Services, Headcount,
Overtime, Personnel Rationalization, Tenant Broker to
negotiate with Landlord, facilities rationalization, reduce
dividends, reduce advertising, research and
development and re-consider new investment in
operating initiatives.
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15. Cash Management Strategies
Unforeseen Events May Exhaust Cash Resources
Terrorist Attack – WTC, Air Travel Ceases.
Anthrax in the U.S. Mail.
War is Declared – U.S. Invades Afghanistan, Iraq, etc.
USDA bans sale of spinach.
Credit Markets Freeze – Home Sales and Construction.
Auto Makers File Bankruptcy.
State of California stops paying vendors, uses warrants.
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16. Cash Management Strategies
Workout and Restructuring
Breach of Covenant or Monetary Default to Lender
Bank moves Company to Special Assets (Workout)
Special Assets Requires:
13 Week Cash Flow Discipline and Other Weekly Reporting
Operational Turn Around Proposal from Borrower
New Capital From Equity Sponsor or Guarantor
Freezes Revolver and Credit Facilities in many instances
May Sweep Company Bank Accounts or Accelerate
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17. Cash Management Strategies
Workout and Restructuring
13 Week Cash Flow Discipline
Updated Weekly Report with 13 week horizon
Different from Integrated Financial Model
Comprise of:
Weekly Borrowing Base Reconciliation
AR and Collections Detail
Payroll and Other Disbursements Detail
Accounts Payable and Cash Requirements Report
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18. Glossary of Terms
Financial Modeling Components
Key Financial Ratios
Cash Management
Credit Terms
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19. Glossary of Terms
Financial Modeling Components
AR Aging - Used with 13 week cash flow to anticipate receipts
Availability – Credit Available on Revolver, i.e. funds which can be borrowed by the
Corporation
Borrowing Base – or Collateral Base, defines what the bank is willing to lend against on
Accounts Receivable, Inventory or PPE
Bridge Analyses or Studies – Analysis of changes to revenue or costs between periods.
BS Drivers – Defines how the balance sheet behaves in terms of cash. Includes
Amortization of debt, collateral base advances and retirements, DSO‟s of Accounts
Receivable, working capital initiatives, Operating Plan, etc.
Covenants – Comes from Credit Agreement or possibly Regulatory constraints
Cross Aging - Limits use of Borrowing Base for customer concentration or aging risks.
Debt Amortization – Required payments of principal under credit facilities.
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20. Glossary of Terms
Financial Modeling Components
Financials – Prior Period and Projected in Trial Balance Detail
IS Drivers – Defines behavior of Income statement items, i.e. Sales
Operating Plan – The plan of the business in non-financial terms, man
hours, machine hours, units produced, houses built, crops grown, etc.
Operational Initiatives - New Initiatives in the Operating Plan which
will have impact on the financial model, the balance sheet, the bridge
studies, i.e. plant closures, SKU Rationalization, new products, etc.
Payroll Masters – Payroll detail at the Departmental Level
Cash Requirements Report – Extracted from AP detail, defines Cash
Requirements by vendor by week going forward, for 13 week cash flow.
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21. Glossary of Terms
Key Financial Ratios
EBITDA – Earnings Before Interest Taxes, Deprecation and
Amortization, usually on a TTM/LTM Basis
Fixed Charge Coverage Ratio – EBITDA divided by „Fixed Charges‟
typically Interest, Principal and Capex.
Interest Coverage Ratio – EBITDA divided by Interest Expense
LTM/TTM – Last Twelve Months or Trailing Twelve Months
Maximum Capital Expenditures – Constraint on Capital Expenditures
Minimum EBITDA – Minimum EBITDA which may be required under
Credit Agreement
Senior Debt Leverage Ratio – Senior Debt divided by TTM EBITDA
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22. Glossary of Terms
Cash Management
BAI2 – File Architecture format used to support on line Bank Recs.
Book Cash - Cash balance on Company‟s books, may be different from
what Bank shows due to deposits in transit, checks outstanding, etc.
Concentration/ZBA – Sweeps Cash to central account.
Controlled Disbursement – Deposits Cash when checks presented.
DSO - Days Sales Outstanding in Accounts Receivable
Inventory Turn Over Ratio – COGS divided by Average Inventory
Operating Cycle – Duration of Inventory and AR. Length of time for
investment by company to come back in the form of cash.
Positive Pay – Notices Bank of checks issued by Company.
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23. Glossary of Terms
Credit Terms
Altman Z Score – Score developed by Professor Altman to predict risk
of Bankruptcy of Company.
13 Week Cash Flow Model – Projection of Cash Flows and
Requirements of Company, first product required by Special Asset
Departments of Lenders when Company is in Workout
Restructuring – Changes to Capital Structure of the Company.
Turn Around – Improving the operational performance of the company.
Shared National Credit – Loans which are shared by multiple banks
under the SNC conventions of the Federal Reserve begun in 1977.
Zone of Insolvency – Company unable to meet obligations when due
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