5公司理财

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(net) Working capital management
Think:
How to manage net working capital?
… …
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(net) Working capital management
The guiding principal of net working capital:
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the Balance Sheet （资产负债表）
Assets (资产） ====
Liabilities + Equity(负债+权益） Current liabilities（流动负债） Account Payable（应付帐款） Salary Payable（应付工资） Income Tax Payable（应交税金） Long-term debts with maturity date within one year（一年内 到期长期负债） Long-term Debts（长期负债） Note Payable（应付票据） Bond Payable（应付债券） ---------------------------------------------Shareholders’ equity（股东权益） Common Stock（普通股） Paid-In-Capital In Excess of Par （相当于资本公积金——溢价发行） Retained Earnings（保留盈余，相 当于盈余公积和未分配利润） Current Assets (流动资产） Cash and cash equivalents （现金 和银行存款） Account Receivable（应收账款） Inventory（存货） Long-term Assets（长期资产） Assets Investment（长期投资） Building, Property, plants and equipments (PPE) Intangible assets（无形资产）
10
(net) Working capital management
Liabilities: Risk –return tradeoff
The firm’s use of current versus long-term debt also involves a risk- return trade off .
17
(net) Working capital management
The use of hedging principal
1.total assets are divided into two groups: Permanent assets
An investment in an asset that the company expects to hold for the foreseeable future. Permanent investment can be made in fixed assets and the minimum level of current assets.
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(net) Working capital management
The guiding principal of net working capital:
Principal of self-liquidating debt (Hedging principal)
This principal provides a guide to the maintenance of a level of liquidity sufficient for the company to meet its maturing obligations on time.
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Introduction
Think:
1.What is the working capital? 2.Producing the same sales, the company need invest less working capital than other companies. What’s that mean? 3.How to manage the working capital?
3
Introduction
Case:
In 1990, American Standard Company invested over $735 million in working capital. Later, American Standard performed a strategic plan and the inventory decreased by half. By 1993, American Standard had revenues totaling $4.2 billion, and the company’s sales of $1 need invest only 5 cents working capital compared to the norm of 15 cents.
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(net) Working capital management
Assets: Risk –return tradeoff
Generally speaking, the greater the company’s investment in current assets, the greater its liquidity. But if the investing more in cash or marketable securities, the company’s current assets earn little or no return.
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(net) Working capital management
Working capital
The company’s total investment in current assets or assets which it expects to be converted into cash within a year or less.
Chapter 5 working capital management
1
Section 5.1 working capital and shortterm financing
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Main content
Net working capital Risk-return trade off principal Hedging principal Short-term financing
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(net) Working capital management
Liabilities: Risk –return tradeoff
Disadvantages of current liabilities: the risk
The use of current liabilities subject the company to a greater risk of illiquidity: Short-term debt must be repaid or rolled over often, so it maybe increase the possibility the needed funds might not be available; The other disadvantage of short-term debt is the uncertainty of interest costs from year to year.
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(net) Working capital management
Assets: Risk –return tradeoff
Managing the company’s working capital involves a trade off between the company’s liquidity and its profitability
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(net) Working capital management
Liabilities: Risk –return tradeoff
Remember:
Other things remaining the same, the greater the company’s reliance on short-term debt or current liabilities in financing its asset investments, the greater the risk of illiquidity.
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(net) Working capital management
Net working capital
The difference between the company’s current assets and its current liabilities.
Notice: Frequently when the term working capital is used actually intended to mean net working capital.
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(net) Working capital management
The use of hedging principal
In general, liquidate debt is used as temporary financing, equity and long-term debt used as Permanent financing. Spontaneous financing includes:
Principal of self-liquidating debt (Hedging principal)