22107 Lecture Notes - Lecture 12: Net Present Value, Cash Flow, Discounted Cash Flow
Document Summary
Used to project the amount of cash expected to be received from sales and cash collections from customers. The cash receipts budget shows cash receipts that are generated from operating activities e. g. cash sales of inventory or services and customer payments on account. Excess capacity: special orders are rarely accepted if a company does not have excess capacity, even when excess capacity exists and a special order is profitable, companies must consider qualitative factors. Make or buy decisions: short-term decisions to outsource labour or to purchase components used in manufacturing from another company rather than to provide services or produce internally. Vertical integration: accomplished when a company is involved in multiple steps of the value chain. E. g. a company owns a farm and produces the milk: advantages: not dependent on timely delivery and can control quality, disadvantages: suppliers may supply higher-quality items at less cost.
