MGMT 3320 Chapter Notes - Chapter 7: Financial Statement, Eurodollar, Equifax

• School: University of Guelph
• Department: Management
• Course: MGMT 3320
• Professor: Rachel Elliott

Document Summary

Cost benefit analysis: gives framework to identify resultant changes that come from a decision. Often considered on basis of yields (rates of return) or cost (interest) of financing compared to the amount of capital invested/borrowed for investment. When examining techniques for working capital management, think about: Timeliness of information provided (whether better or worse) A manager actively tries to keep cash (a non-earning asset) to a minimum: generally, less cash you have the better off you are but you don"t want to be without it when you need it. ) With lower interest rates today (lower opportunity costs) firms have decided to have higher cash balances. Transactions of an immediate (payrolls) or strategic nature (mergers, acquisitions) Precautionary balances if bank financing becomes unavailable (cyclical, seasonal, new product oriented business) Managing firm"s inflows & payments depends on different variables: There are 2 cash balances that are of importance; the difference between the 2 is the float a) b)