MGMT 3320 Chapter 7: FM Chapter 7
11 Mar 2017
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Document Summary
Cost-bene t analysis: provides a framework to identify all the resultant changes arising from a decision. Roi = monies received net capital tied up. Cash management: generally, the less cash you have on hand the better off you are, but you still want to have cash when you need it. Reasons fro holding cash balances: transaction of an immediate (payrolls) or strategic (mergers, acquisitions, compensating balances for bank services, precautionary balances if bank nancing becomes unavailable (cyclical, seasonal, new product oriented business, avoiding taxes by not repatriating cash. Float: exists as a result of the time lag between when payment or recipes is recorded in the corporation"s elders and the eventual acknowledgment that it has altered the corporate bank account. Float arises from pavement or receipts that are : in the mail, clearing the banking system, being processed, slow to be acknowledged by the rm"s (bank"s) information system.
