Business Administration - Management FIS403 Lecture Notes - Lecture 13: Cash Cash, Savings Account, Money Market Fund

• School: Seneca College
• Department: Business Administration - Management
• Course: Business Administration - Management FIS403
• Professor: maria

Document Summary

Current assets, high or low: more inventory, ma(cid:455)(cid:271)e it has(cid:374)"t (cid:271)ee(cid:374) sold, less cash on hand, are we not making sale, do(cid:374)"t (cid:449)a(cid:374)t e(cid:454)(cid:272)ess i(cid:374)(cid:448)e(cid:374)to(cid:396)(cid:455), (cid:374)ot e(cid:374)ough inventory. Giving lots of credit, having capital tied up in current assets. Ca(cid:374)"t use that (cid:373)o(cid:374)e(cid:455) to g(cid:396)o(cid:449) the (cid:271)usi(cid:374)ess. Explicit and implicit costs and benefits: weigh costs and benefits to best use of your resources. Cash management: maintain optimum level of cash, use the float, speed up collections, extend disbursements. Try to put off paying suppliers as long as possible: use cash budgets. 2 reasons for holding cash: 1. Precautionary needs (emergencies: compensating balances at banks. Ba(cid:374)k sa(cid:455)s the(cid:455) (cid:272)a(cid:374) loa(cid:374) (cid:455)ou (cid:862)(cid:1005)(cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004)(cid:863) (cid:271)ut (cid:455)ou ha(cid:448)e to keep (cid:862)(cid:1005)5(cid:1004)(cid:1004)(cid:1004)(cid:863) i(cid:374) (cid:272)he(cid:395)ui(cid:374)g a(cid:272)(cid:272)ou(cid:374)t: avoiding taxes by repatriating money, goals are speed up inflow, slow down outflow, attempt (cid:862)play the float(cid:863) Keep safety level in cash, invest the excess: low-risk, liquid investments. Companies can have savings account as well.