Providing and Obtaining Credit

Slides:

Advertisements

Similar presentations

Chapter 20 Learning Objectives

Advertisements

Overview of Working Capital Management

Level 2 Analysis & Interpretation Achievement Standard (2.6) ACC 10/2/9.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Leasing Chapter Twenty-Six.

Copyright © 2002 Harcourt, Inc.All rights reserved. CHAPTER 22 Current Asset Management Alternative working capital policies Cash management Inventory.

Credit Insurance: A Business Solution

Key Concepts Understand the key issues related to credit management

Credit Control ( AR Management)

CHAPTER 15 Pricing and Credit Decisions

Chapter 9 Accounting for Inventories. Inventory Retailers: finished goods held for sale; balances can be large (77% of current asset & 25% of total assets.

Financial Planning and Forecasting Financial Statements

Chapter Outline Tracing Cash and Net Working Capital

MANAJEMEN KEUANGAN - Kuliah V CREDIT MANAGEMENT RWJJ CH. 28 FEUI Program Studi Maksi – PPAK Sugeng Purwanto Ph.D, FRM Tugas: Pelajari Exercises.

Chapter 4: Financial Statement Analysis

10b.1 Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited Created by Gregory Kuhlemeyer. Chapter.

15-1 CHAPTER 15 Managing Current Assets Alternative working capital policies Cash management Inventory management Accounts receivable management.

Working Capital and Current Asset Management

Copyright © 1999 by the Foundation of the American College of Healthcare Executives CHAPTER 16 Current Asset Management and Financing Investment.

Working Capital Management

Capital Structure Debt versus Equity. Advantages of Debt Interest is tax deductible (lowers the effective cost of debt) Debt-holders are limited to a.

1 Reference: Chapter 1 and 11 （ Book 2 ） Accounting Ratio 17.

Lecture Five Managing Current Assets Alternative working capital policies Cash management Inventory management Accounts receivable management.

Financial Management Liliya N. Zhilina, World Economy and Inrernational Relations Department, Vladivostok State University of Economic and Services (VSUES).

CHAPTER 16 Managing Current Assets Alternative working capital policies Cash management Inventory management Accounts receivable management.

ACCOUNTS RECEIVABLE AMOUNTS OWED TO A BUSINESS DUE TO RENDERING GOODS OR SERVICES ON CREDIT.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.

Working Capital Management

Ratio Analysis.

Interpreting the Accounts (Ratio Analysis). What is ratio analysis? A set of accounting ratios often used to help interested parties interpret ( make.

CHAPTER 27 Banking Relationships Receivables management Credit policy Days sales outstanding (DSO) Aging schedules Payments pattern approach Cost.

1 CHAPTER 22 Working Capital Management. 2 Topics in Chapter Alternative working capital policies Cash, inventory, and A/R management Accounts payable.

Ratio Analysis A2 Accounting.

CHAPTER 22 Current Asset Management

15-1 CHAPTER 15 Working Capital Management Alternative working capital policies Cash management Inventory and A/R management Trade credit Bank loans.

16-1 CHAPTER 15 Working Capital Management Alternative working capital policies Cash management Inventory and A/R management Trade credit Bank loans.

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.

Copyright © 2001 by Harcourt, Inc.All rights reserved. ( 海量营销管理培训资料下载 ) CHAPTER 16 Managing Current Assets.

CREDIT MANAGEMENT. The Cash Flows of Granting Credit Credit sale is made Customer mails check Firm deposits check Bank credits firm’s account Accounts.

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Working Capital Policy

PowerPoint Presentation prepared by Traven Reed Canadore College.

Providing and Obtaining Credit

1 Accounts Receivable, Management. 2 Marginal Analysis Problem The Northern Muse Corp. is considering a change in credit policy. Managers are considering.

Analyzing Financial Statements. Financial Statement and its Analysis Collective name for the tools and techniques that are intended to provide relevant.

Chapter 14.  To make informed decisions about a company  Generally based on comparative financial data ◦ From one year to the next ◦ With a competing.

© 2007 Thomson South-Western Chapter 23 Short-Term Financial Management Professor XXXXX Course Name / Number.

1 CHAPTER 22 Working Capital Management. 2 Topics in Chapter Alternative working capital policies Cash, inventory, and A/R management Accounts payable.

Financial Management Back to Table of Contents. Financial Management 2 Chapter 21 Financial Management Analyzing Your Finances Managing Your Finances.

Chapter 30 Principles of Corporate Finance Tenth Edition Working Capital Management Slides by Matthew Will McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill.

Analyzing Financial Statements

3.4 Ratio Analysis Aims to judge a firm’s financial performance. Based on assumption that firms want to make a profit.

15-1 CHAPTER 15 Managing Current Assets Alternative working capital policies Cash management Inventory management Accounts receivable management.

20-0 Credit Policy Effects 20.3 Revenue Effects Delay in receiving cash from sale May be able to increase price May increase total sales Cost Effects –

V. STOCKS. L. RATIO ANALYSIS 1.Ratios That Measure Liquidity (the firm’s ability to convert assets into cash) a.Current Ratio = Current Assets Current.

10-1 Chapter 10 Accounts Receivable Accounts Receivable and Inventory Management u Credit and Collection Policies u Analyzing the Credit Applicant.

CHAPTER 11 FINANCIAL STATEMENT ANALYSIS McGraw-Hill/Irwin©The McGraw-Hill Companies, Inc., 2002.

Copyright © 2003 Pearson Education, Inc. Slide 14-0 Ch 14 Learning Goals 1.Impact of working capital management on liquidity, profitability and risk. 2.Cash.

RECEIVABLES MANAGEMENT.  OPPORTUNITY COST  COLLECTION COST  BAD DEBTS  INCREASED SALES  INCREASE IN MARKET SHARE  INCREASE IN PROFITS.

Copyright © 2002 South-Western CHAPTER 20 Current Asset Management Alternative working capital policies Cash management Inventory management Accounts.

Ratio Analysis Business and Management, SL. U56 – Ratio Analysis.

CHAPTER 16 Managing Current Assets

CHAPTER 16 Working Capital Management & Supply Chain

CHAPTER 14 Working Capital Management

Financial Statement Analysis

Supply Chains and Working Capital Management

TERMS OF SALE: There are three factors underlying terms of sale:

Receivables Management

Working Capital Management

CHAPTER 15 Managing Current Assets

Chapter 8 Overview of Working Capital Management

Presentation transcript:

Providing and Obtaining Credit Chapter 27 Providing and Obtaining Credit

Topics in Chapter Receivables management Cost of bank loans Credit policy Days sales outstanding (DSO) Aging schedules Payments pattern approach Cost of bank loans

Elements of Credit Policy Cash Discounts: Lowers price. Attracts new customers and reduces DSO. Credit Period: How long to pay? Shorter period reduces DSO and average A/R, but it may discourage sales. (More…)

Credit Policy (Continued) Credit Standards: Tighter standards reduce bad debt losses, but may reduce sales. Fewer bad debts reduces DSO. Collection Policy: Tougher policy will reduce DSO, but may damage customer relationships.

What are some factors which influence the dollar cost of carrying receivables? The lower the profit margin, the higher the cost of carrying receivables, because a greater portion of each sales dollar must be financed. The higher the cost of financing, the higher the dollar cost.

What four variables make up a firm’s credit policy? Cash discounts Credit period Credit standards Collection policy

Disregard any previous assumptions Current credit policy: Credit terms = Net 30. Gross sales = $1,000,000. 80% (of paying customers) pay on Day 30. 20% pay on Day 40. Bad debt losses = 2% of gross sales. Operating cost ratio = 75%. Cost of carrying receivables = 12%.

The firm is considering a change in credit policy New credit policy: Credit terms = 2/10, net 20. Gross sales = $1,100,000. 60% (of paying customers) pay on Day 10. 30% pay on Day 20. 10% pay on Day 30. Bad debt losses = 1% of gross sales.