MGTA05H3 Lecture Notes - Lecture 5: Cash Flow, Retained Earnings, Commercial Paper
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MGTA05H3 Full Course Notes
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Timing of inflows/outflows of funds is not coordinated. Purchase equipment, land and buildings that will be used in production. Cash flow problems the need to have money available when it is needed. Businesses need money to buy materials, pay for labour and produce items for. But collections of revenue from sales come at the end of the process, not the. Business needs new warehouse or sales office. These assets are expensive, and the business cannot always save to pay for them. Where does the business get money for both short-term and long-term needs. Trade credit letting your suppliers finance the business by paying later. Secured short term loans the bank gives you money to buy inventory and deal with accounts receivable. Factoring of accounts selling accounts receivable to someone else for cash. Lines of credit, revolving credits amounts are set aside that you draw down as needed and then repay. Commercial paper short term loans from the market.
