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1.Beginning cash balance 2.Cash receipts a.Collection of accounts receivable b.Investment income 3.Cash disbursements a.Payment of accounts payable b.Payment.

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Presentation on theme: "1.Beginning cash balance 2.Cash receipts a.Collection of accounts receivable b.Investment income 3.Cash disbursements a.Payment of accounts payable b.Payment."— Presentation transcript:

1 1.Beginning cash balance 2.Cash receipts a.Collection of accounts receivable b.Investment income 3.Cash disbursements a.Payment of accounts payable b.Payment of accrued expenses

2 4.Ending cash balance 5.Required cash balance (minimum cash balance) 6.Investing surplus cash 7.Covering cash shortage

3 1. Accelerating collections 2. Stretching payables 3. Tightening credit terms

4 1. CIA (cash in advance) 2. CBD (cash before delivery) 3. COD (cash on delivery) 4. Cash 5. Standard terms, e.g., 2/10, net 30

5 1. Trade credit 2. Line of credit - an informal agreement between a bank and a borrower indicating the maximum credit the bank will extend to the borrower 3. Revolving credit agreement – a formal line of credit often used by large firms (commitment fee)

6 4. Pledging accounts receivable – the use of accounts receivable as collateral against a loan 5. Factoring accounts receivable - the sale of accounts receivable 6. Issue commercial paper – an unsecured promissory note with a fixed maturity of 1 to 270 days; issued by large corporations to meet short term liabilities 7. New note from owner/corporate officer

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