ADMS 4541 Lecture Notes - Lecture 2: Effective Interest Rate, Corporate Finance, Current Asset
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15 Apr 2018
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Net cash inflow = sources - uses (row 24) Bank loans: simplest and most common form of short term financing. Inventory financing: when loans are secured by inventory. Amt. of loan x (annual interest rate/number of periods in a year) Short term financial planning is concerned with the management of the firm"s short-term or current assets. The starting point for short term financial planning is forecasting the sources and uses of cash. Permanent current assets : the minimum amount of current assets a company needs to continue operations. Permanent current assets are current assets that are always replaced with like assets within one year. Inventory, depreciating assets, cash and accounts receivable are examples of this. Temporary current assets: these represent the changes in working capital that arise in the normal course of business operations. For example when some accounts receivable are settled later than expected, or when inventory moves more slowly than planned.