LU3 Flashcards
cash management refers to
management of cash balances, cash flow and short term investment in securities
cash consists of
petty cash(changes)
cash on hand(operational purposes)
cash in bank(demand and time deposits)
sufficient cash is needed to cover:
short term debts
operational expenses
What does minimum cash balance should cover and provide?
risk of cash shortfalls
adequate petty cash
adequate house banks
cover cheques issued
What do investors monitor and why?
cash flow statements especially! To determine whether the operation had sufficient cash to pay dividend and will be jn the future
working capital
currents assets-current liabilities
importance of positive working capital important for creditors and owners alike?
for creditors if hotel can pay current debts
to have sufficient cash to pay expenses
oc
acp,ihp,pdp,ccc
what results in income flows?where is it shown and and what does it reflect?
generating revenues and incurring expenses
shown on income statement
reflect result of operations
cash flows consists of? And what can happen?
receipt and disbursement of cash
possible to genrate profit and have a negative cash flow
cash budget
estimated cash receipts and cash disbursements
if not enough management has to take action
6 factors to take into consideration when investing excess cash
risk return liquidity cost size time
2 basic approaches
cash receipts and disbursement(beyond 6 months)
adjusted net income( longer than 6 months)
float
time between happening on account and actual addition/substraction
managing accounts receivable
credit selection and standers
terms
monitoring
What happens when you relax credit standards?
increase sales = CM
increase in investment costs on acc rec.
increase in bad dept expense
Why is inventory surplus negative?
ties up cash
managing payables
trade payable
short-term bank loans
improving cash availability
pay in a advance:) sell marketable securities:) spend less on inventory:) delay payment to supplier:/ borrow on short term:/ postpone dividend payment:/ sell capital stock:/ borrow on long term:(
managing payables:how to pay “less”?
pay only when due(reinvest)
aim for interest free credit
consider cash discounts
When managing acc receivable towards customer what does have to be taken into consuderstion?
- ask for bank guarantee
- do i need additional cash for brig projects? —–should i give this now?
- collection techniques: letters, calls, agencies or even sell it
