ADM 3350 Lecture Notes - Lecture 1: Opportunity Cost, Interest Rate, Current Liability

• School: University of Ottawa
• Department: Administration
• Course: ADM 3350
• Professor: Kaouthar Lajili

Document Summary

Executive summary: we are solidly into the third great question of corporate finance, how much short-term cash flow does a company need to pay its bills, this chapter introduces the basic elements of short-term financial decisions. It: describes the short-term operating activities of the firm. identifies alternative short-term financial policies, outlines the basic elements in a short-term financial plan, describes short-term financing instruments. Tracing cash and net working capital: current assets are cash and other assets that are expected to be converted to cash with the year. Taxes: current liabilities are obligations that are expected to require cash payment within the year. The operating cycle and the cash cycle (figure 27. 3) *important. The time period from the arrival of the stock until the receipt of cash. Inventory period (selling the goods on cash) + accounts receivable period (selling the goods on credit) Understand the components of the cash cycle and why it is important.