Boundless Lecture Slides
Available on the Boundless Teaching Platform
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless Teaching
Platform
Boundless empowers educators to engage their students
with affordable, customizable textbooks and intuitive
teaching tools. The free Boundless Teaching Platform
gives educators the ability to customize textbooks in
more than 20 subjects that align to hundreds of popular
titles. Get started by using high quality Boundless books,
or make switching to our platform easier by building from
Boundless content pre-organized to match the assigned
textbook. This platform gives educators the tools they
need to assign readings and assessments, monitor
student activity, and lead their classes with pre-made
teaching resources.
Using Boundless Presentations
The Appendix
The appendix is for you to use to add depth and
breadth to your lectures. You can simply drag and
drop slides from the appendix into the main
presentation to make for a richer lecture
experience.
Get started now at:
http://boundless.com/teaching-platform
Free to edit, share, and copy
Feel free to edit, share, and make as many copies
of the Boundless presentations as you like. We
encourage you to take these presentations and
make them your own.
If you have any questions or problems please email:
educators@boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
About Boundless
Boundless is an innovative technology company making education more affordable and
accessible for students everywhere. The company creates the world’s best open educational
content in 20+ subjects that align to more than 1,000 popular college textbooks. Boundless
integrates learning technology into all its premium books to help students study more efficiently
at a fraction of the cost of traditional textbooks. The company also empowers educators to
engage their students more effectively through customizable books and intuitive teaching tools
as part of the Boundless Teaching Platform. More than 2 million learners access Boundless free
and premium content each month across the company’s wide distribution platforms, including its
website, iOS apps, Kindle books, and iBooks. To get started learning or teaching with
Boundless, visit boundless.com.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital
Management
The Importance of Cash
Cash Management
Securities Management
Accounts Receivable
Inventory Management
Boundless.com/finance?campaign_content=book_192_ch
apter_18&campaign_term=Finance&utm_campaign=powe
rpoint&utm_medium=direct&utm_source=boundless
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management > The Importance of Cash
The Importance of Cash
• Reasons for Maintaining Cash on Hand
• Defining the Cash Flow Cycle
• Calculating the Cash Flow Cycle
• Components of the Cash Budget
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir
ect&utm_source=boundless
Working Capital Management > The Importance of Cash
Reasons for Maintaining Cash on Hand
• Liquidity is the ability to meet obligations when they come due without incurring
unacceptable losses.
• Banks can generally maintain as much liquidity as desired, because bank
deposits are insured by governments in most developed countries.
• Banks can attract significant liquid funds to generate stronger profits, more
stability, and more confidence among depositors, investors, and regulators.
• Cash is the most liquid asset and can be used immediately to perform economic
actions like buying, selling, or paying debt, and meeting immediate wants and
needs.
Cash
• Bank can attract significant liquid funds to generate stronger profits, more stability,
View on Boundless.com
and more confidence among depositors, investors, and regulators.
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/the-importance-of-cash-125/reasons-formaintaining-cash-on-hand-511-
Working Capital Management > The Importance of Cash
Defining the Cash Flow Cycle
• In management accounting, the cash conversion cycle (CCC) measures how long
a firm will be deprived of cash if it increases its investment in resources in order to
expand customer sales.
• It is thus a measure of the liquidity risk entailed by growth. However, shortening
the CCC creates its own risks. While a firm could even achieve a negative CCC
by collecting from customers before paying suppliers, a policy of strict collections
and lax payments is not always sustainable.
• The term "cash conversion cycle" refers to the timespan between a firm's
disbursing and collecting cash.
• Since a retailer's operations consist of buying and selling inventory, the equation
Cash flow cycle
View on Boundless.com
models the time between (1) disbursing cash to satisfy the accounts payable
created by purchase of inventory, and (2) collecting cash to satisfy the accounts
receivable generated by that sale.
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/the-importance-of-cash-125/defining-thecash-flow-cycle-512-
Working Capital Management > The Importance of Cash
Calculating the Cash Flow Cycle
• Cash flow cycle = Inventory conversion period + Receivables conversion period –
Payables conversion period.
• Inventory conversion period = Avg. Inventory / (COGS / 365); Receivables
conversion period = Avg. Accounts Receivable / (Credit Sales / 365); Payables
conversion period = Avg. Accounts Payable / (Purchases / 365).
• There are five important intervals, referred to as conversion cycles (or conversion
periods).
• Our aim of studying cash conversion cycle and its calculation is to change the
policies relating to credit purchase and credit sales.
Cash cycle
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/the-importance-of-cash-125/calculating-thecash-flow-cycle-513-
Working Capital Management > The Importance of Cash
Components of the Cash Budget
• The cash flow budget helps the business determine when its income will be
sufficient to cover its expenses and when the company will need to seek outside
financing.
• Components - major classes include cash receipts and payments.
• Cash receipts include cash generated from operations, cash receipts from
customers, proceeds from the sale of equipment, dividends received, and other
income.
• Cash payments include cash paid to suppliers, cash paid to employees, purchase
of assets, payments related to mergers and acquisitions, interest paid, income
Budgeting Example
taxes paid, dividends paid, and other payments.
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/the-importance-of-cash-125/components-ofthe-cash-budget-514-
Working Capital Management > Cash Management
Cash Management
• Managing Float
• Managing Collections
• Managing Disbursements
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir
ect&utm_source=boundless
Working Capital Management > Cash Management
Managing Float
• Float is most apparent in the time delay between a check being written and the
funds to cover that check being deducted from the payer's account.
• Bank float is the time it takes to clear the funds, from the time they were
deposited to the time they were credited to the depositing bank. Customer float is
defined as the span of time between the deposit to the time the funds are
released for use by the depositor.
• When managing cash disbursements, a company should endeavor to increase
the amount of time present in the disbursement cycle.
Floating Cash
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/cash-management-126/managing-float-5153820?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=bound
Working Capital Management > Cash Management
Managing Collections
• Specific collection techniques include letters, telephone calls, faxes, emails, and
legal action.
• Wherever possible, a company should try to collect payment immediately as
products or services are delivered.
• A company may set up a lock box service with their bank for receiving customers'
payments.
Example Collection Letter
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/cash-management-126/managingcollections-516-
Working Capital Management > Cash Management
Managing Disbursements
• One obvious trend in payroll management is to implement a flexible work force
since the flow of work fluctuates.
• Purchasing practices, such as renting as opposed to buying or buying out of
season, can help a company maintain and generate cash flow.
• Inventories have several hidden costs that can drain cash flow, including storage,
insurance, spoilage, handling, taxes, and financing.
• A company should make sure it does not over insure the business.
Cash Disbursements
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/cash-management-126/managingdisbursements-517-
Working Capital Management > Securities Management
Securities Management
• Managing Marketable Securities
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir
ect&utm_source=boundless
Working Capital Management > Securities Management
Managing Marketable Securities
• Marketable securities are the securities that can be easily liquidated without any
delay at a reasonable price.
• Firms will maintain levels of marketable securities to ensure that they are able to
quickly replenish cash balances and to obtain higher returns than is possible by
maintaining cash.
• There are four factors that influence the choice of marketable securities. These
include risks, maturity, yield, and liquidity.
A Marketable Security
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/securities-management-127/managingmarketable-securities-518-
Working Capital Management > Accounts Receivable
Accounts Receivable
• Defining Accounts Receivable
• Setting a Credit Policy
• Terms of Trade
• Collecting Receivables
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir
ect&utm_source=boundless
Working Capital Management > Accounts Receivable
Defining Accounts Receivable
• In most businesses, accounts receivable is executed by generating an invoice
and either mailing or electronically delivering it to the customer, who, in turn, must
pay it within an established timeframe.
• Account receivables are classified as current assets assuming that they are due
within one year.
• Revenue has a big impact on bottom-line profitability, so managers may be
tempted to "manage" revenue recognition.
Accrual Recognition
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/accounts-receivable-128/defining-accountsreceivable-519-
Working Capital Management > Accounts Receivable
Setting a Credit Policy
• Management must decide on credit standards, which involves decisions on how
much credit risk to assume.
• Another important factor in determining credit standards involves a company
evaluating the credit worthiness of an individual or business.
• After establishing credit standards, the firm must decide on the length of the
period before payment must be made and whether or not they will offer a discount
for early payments.
• The last step is to establish a collection policy.
Credit Score Factors
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/accounts-receivable-128/setting-a-creditpolicy-520-
Working Capital Management > Accounts Receivable
Terms of Trade
• Credit terms are often quoted "net X" with X being a certain number of days.
• An example of a common payment term is Net 30, which means that payment is
due at the end of 30 days from the date the invoice is issued.
• The debtor is free to pay before the due date, and many businesses can offer a
discount for early payment.
• A discount stated as 2/10, net 30 means that the buying firm will receive a two
percent discount if it pays by the tenth day, or else they will pay the full amount in
30 days.
Markup
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/accounts-receivable-128/terms-of-trade-5217277?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=bound
Working Capital Management > Accounts Receivable
Collecting Receivables
• Collecting on accounts receivable is the final step in the credit extension process,
and arguably the most difficult.
• Accounts receivable days and an aging schedule are tools used to monitor
accounts receivable.
• The accounts receivable days is the average number of days that it takes a firm to
collect on its sales. The aging schedule categorizes accounts by the number of
days they have been on the books.
• A company may protect against bad-debts losses by purchasing trade credit
insurance.
Collection Letter
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/accounts-receivable-128/collectingreceivables-522-
Working Capital Management > Inventory Management
Inventory Management
• Inventory Types
• Inventory Techniques
• ABC Technique
• Seasonal Production
• Impact of Inflation on Inventory Management
• Inventory Costs
• Economic Order Quantity Technique
• Just-in-Time Technique
• Benefits of Inventory Management
• Dangers Involved in Inventory Management
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance?campaign_content=book_192_chapter_18&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir
ect&utm_source=boundless
Working Capital Management > Inventory Management
Inventory Types
• 1. Raw materials: Materials and components scheduled for use in making a
product.
• 2. Work in process, WIP: Materials and components that have began their
transformation to finished goods.
• 3. Finished goods: Goods ready for sale to customers.
• 4. Goods for resale - returned goods that are salable.
Manufacturing process
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/inventory-types523-
Working Capital Management > Inventory Management
Inventory Techniques
• FIFO stands for first-in, first-out, meaning that the oldest inventory items are
recorded as sold first but do not necessarily mean that the exact oldest physical
object has been tracked and sold.
• LIFO stands for last-in, first-out, meaning that the most recently produced items
are recorded as sold first.
• Average cost method takes the weighted average of all units available for sale
during the accounting period and then uses that average cost to determine the
value of COGS and ending inventory.
Inventory
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/inventorytechniques-524-
Working Capital Management > Inventory Management
ABC Technique
• A items: very tight control and accurate records; B items: less tightly controlled
and good records; C items: simplest controls possible and minimal records.
• The ABC analysis provides a mechanism for identifying items that will have a
significant impact on overall inventory cost, while also providing a mechanism for
identifying different categories of stock that will require different management and
controls.
• The ABC analysis suggests that inventories of an organization are not of equal
value.
ABC analysis
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/abc-technique525-
Working Capital Management > Inventory Management
Seasonal Production
• Inventories are maintained as buffers to meet uncertainties in demand, supply
and movements of goods.
• A company working in a seasonal industry should create a plan based on
historical sales data and other relevant information.
• Companies are also supposed to stock inventory early since there will be other
producers competing for the same production materials during peak period. Early
ordering, in addition, helps the company adjust its inventory demand if necessary.
• It is advisable that a company has healthy cash flow during seasonal peak so that
it can order promptly and easily. This, of course, has to take into consideration the
Inventory management
opportunity cost of holding money.
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/seasonalproduction-526-
Working Capital Management > Inventory Management
Impact of Inflation on Inventory Management
• Inflation is a rise in the general level of prices of goods and services in an
economy over a period of time. It reflects an erosion in the purchasing power of
money.
• If inflation is rapid enough, shortages of goods as consumers begin hoarding out
of concern that prices will increase in the future. Therefore, high inflation
encourages companies to keep a high level of inventories.
• The Mundell-Tobin effect also suggests a rise in inventory level in case of high
inflation.
Inflation
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/impact-ofinflation-on-inventory-management-527-
Working Capital Management > Inventory Management
Inventory Costs
• There are, in fact, so many things that can vary hidden under this appearance of
simplicity that a variety of 'adjusting' assumptions may be used. These include:
Specific Identification, Weighted Average Cost, Moving-Average Cost, FIFO, and
LIFO.
• Specific identification requires a detailed physical count, so that the company
knows exactly how many of each goods brought on specific dates remained at
year end inventory.
• Weighted Average Cost is also known as AVCO. It takes Cost of Goods Available
for Sale and divides it by the total amount of goods from Beginning Inventory and
Purchases.
Inventory
View on Boundless.com
• Moving-Average (Unit) Cost is a method of calculating Ending Inventory cost.
Assume that both Beginning Inventory and beginning inventory cost are known.
From them the Cost per Unit of Beginning Inventory can be calculated.
• FIFO stands for first-in, first-out, meaning that the oldest inventory items are
recorded as sold first, but do not necessarily mean that the exact oldest physical
object has been tracked and sold.
• LIFO stands for last-in, first-out, meaning that the most recently produced items
are recorded as sold first.
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/inventory-costs528-
Working Capital Management > Inventory Management
Economic Order Quantity Technique
• Economic order quantity is the order quantity that minimizes total inventory
holding costs and ordering costs.
• EOQ determines the optimal number of units to minimize the total cost associated
with the purchase, delivery, and storage of the product.
• Q* = (DS/H)^1/2 where Q = order quantity, Q*= optimal order quantity, D = annual
demand quantity, S = fixed cost per order, H = annual holding cost per unit.
Economic order quantity
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/economic-orderquantity-technique-529-
Working Capital Management > Inventory Management
Just-in-Time Technique
• JIT focuses on continuous improvement and can improve a manufacturing
organization's return on investment, quality and efficiency.
• JIT relies on efficient coordination of elements in the inventory chain.
• There are many benefits of JIT. It improves the flow of goods from warehouse to
shelves, reduces set up time and efficiently uses human resources.
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/just-in-timetechnique-530-
Working Capital Management > Inventory Management
Benefits of Inventory Management
• Inventory management is primarily about specifying the shape and percentage of
stocked goods.
• Inventory management leads to optimal inventory levels.
• Management of the inventories, with the primary objective of
determining/controlling stock levels within the physical distribution system,
functions to balance the need for product availability against the need for
minimizing stock holding and handling costs.
• Inventory management can also help companies improve cash flows.
Inventory management
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/benefits-ofinventory-management-531-
Working Capital Management > Inventory Management
Dangers Involved in Inventory Management
• Excessive inventory means the firm has idle funds which earn no profits for the
firm. In addition, excessive inventory incurs extra handling and holding costs.
• Inadequate inventory means the firm does not have sufficient raw materials for
production. This also means insufficient ample goods to sell for merchandising
companies.
• Inventory management will be more complicated as moderate inflation and
seasonality get involved.
Inventory control
View on Boundless.com
Free to share, print, make copies and changes. Get yours at www.boundless.com
www.boundless.com/finance/textbooks/boundless-finance-textbook/working-capital-management-18/inventory-management-129/dangersinvolved-in-inventory-management-532-
Appendix
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Key terms
• ABC analysis The ABC analysis is a business term used to define an inventory categorization technique often used in materials
management. It is also known as Selective Inventory Control. Policies based on ABC analysis: A ITEMS, very tight control and
accurate records; B ITEMS, less tightly controlled, and good records; and C ITEMS, simplest controls possible and minimal
records.
• ABC analysis The ABC analysis is a business term used to define an inventory categorization technique often used in materials
management. It is also known as Selective Inventory Control. Policies based on ABC analysis: A ITEMS, very tight control and
accurate records; B ITEMS, less tightly controlled, and good records; and C ITEMS, simplest controls possible and minimal
records.
• accrual accounting A method of accounting in which funds are recorded when they are earned and deductions are claimed
when expenses are incurred.
• bad-debt losses losses resulting from an uncollectible debt.
• balance sheet A summary of a person's or organization's assets, liabilities and equity as of a specific date.
• carrying costs carrying cost refers to the total cost of holding inventory. This includes warehousing costs such like utilities and
salaries; financial costs like opportunity cost; and inventory costs related to perishability, shrinkage and insurance.
• cash flow The sum of cash revenues and expenditures over a period of time.
• check kiting a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or
other bank account.
• collateral A security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to
repay. (Originally supplied as "accompanying" security. )
• collection policy the set of rules for receiving accounts payable or debt
• commercial paper A negotiable instrument with short maturity.
• credit period the amount of time required to receive payment for debt extended
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• Credit Sales Credit Sales are all sales made on credit.
• creditors a person or institution to whom money is owed.
• franchising The establishment, granting, or use of a franchise.
• holding cost In business management, holding cost is money spent to keep and maintain a stock of goods in storage.
• holding cost In business management, holding cost is money spent to keep and maintain a stock of goods in storage.
• holding cost In business management, holding cost is money spent to keep and maintain a stock of goods in storage.
• invoicing the production of a commercial document issued by a seller to the buyer, indicating the products, quantities, and
agreed prices for products or services the seller has provided the buyer.
• Just in Time Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing inprocess inventory and associated carrying costs.
• liquidity Availability of cash over short term: ability to service short-term debt.
• lockbox a service offered to organizations by commercial banks that simplifies collection and processing of account receivables
by having those organizations' customers' payments mailed directly to a location accessible by the bank
• mergers and acquisitions Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance,
and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can
help an enterprise grow rapidly, whether in its sector or location of origin, or a new field or new location, without creating a
subsidiary, other child entity, or using a joint venture.
• money market A market for trading short-term debt instruments, such as treasury bills, commercial paper, bankers'
acceptances, and certificates of deposit
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• outsourcing The transfer of a business function to an external service provider.
• physical capital In economics, physical capital, or just capital refers to a factor of production (or input into the process of
production), such as machinery, buildings, or computers.
• purchasing power Purchasing power (sometimes retroactively called adjusted for inflation) is the amount of goods or services
that can be purchased with a unit of currency.
• retail The sale of goods directly to the consumer; encompassing the storefronts, mail-order, websites, etc., and the corporate
mechanisms, branding, advertising, etc. that support them, which are involved in the business of selling and point-of-sale
marketing retail goods to the public.
• seasonality Variation with the seasons
• seasonality Variation with the seasons
• stockholders A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of
stock in a public or private corporation.
• subsidiary A company owned by the parent company or holding company
• supply chain A system of organizations, people, technology, activities, information, and resources involved in moving a product
or service from supplier to customer.
• supply chain A system of organizations, people, technology, activities, information, and resources involved in moving a product
or service from supplier to customer.
• taxable income Taxable income refers to the base upon which an income tax system imposes tax.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Cash Disbursements
Cash payments are vitally important to manage in order to maintain a successful business.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "All sizes | $5700 | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/amagill/362201147/sizes/s/in/photostream/ View on Boundless.com
Working Capital Management
Collection Letter
This is an example of a letter from a collection agency offering to settle a debt.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "Debt Settlement Offer | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/sercasey/512307249/ View on Boundless.com
Working Capital Management
Inventory management
Female clerk doing inventory work using a handheld computer in a Tesco Lotus supermarket in Sakon Nakhon, Thailand
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "Clerk inventory." CC BY-SA http://commons.wikimedia.org/wiki/File:Clerk_inventory.JPG View on Boundless.com
Working Capital Management
Economic order quantity
Economic order quantity function solving for Q.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikipedia. "Economic order quantity." GNU FDL http://en.wikipedia.org/wiki/Economic_order_quantity View on Boundless.com
Working Capital Management
Cash flow cycle
Cash conversion cycle (CCC) measures how long a firm will be deprived of cash if it increases its investment in resources in order to expand customer
sales.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Google. "Google Image Result for http://www.commbank.com.au/business/images/cashflow_cycle.gif." CC BY
http://www.google.com/imgres?um=1&hl=en&sa=N&biw=1275&bih=595&authuser=0&tbm=isch&tbnid=TKXFv2cUdI6bgM:&imgrefurl=http://www.commbank.com.a
Working Capital Management
Cash cycle
Cash cycle measures how long a firm will be deprived of cash if it increases its investment in resources in order to expand customer sales
Free to share, print, make copies and changes. Get yours at www.boundless.com
Google. "Google Image Result for http://www.cfosystemsllc.com/cfo/wp-content/uploads/2010/01/cash-flow-300x297.jpg." CC BY
http://www.google.com/imgres?um=1&hl=en&sa=N&biw=1275&bih=595&authuser=0&tbm=isch&tbnid=_UFKoR4ztGcctM:&imgrefurl=http://www.cfosystemsllc.com
Working Capital Management
Inventory management
Female clerk doing inventory work using a handheld computer in a Tesco Lotus supermarket in Sakon Nakhon, Thailand.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "Clerk inventory." CC BY-SA http://commons.wikimedia.org/wiki/File:Clerk_inventory.JPG View on Boundless.com
Working Capital Management
Credit Score Factors
This chart depicts the factors that go into an individual's credit score.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "Credit-score-chart." CC BY http://commons.wikimedia.org/wiki/File%253ACredit-score-chart.svg View on Boundless.com
Working Capital Management
Inventory
The inventory costs depend on which method is used.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "All sizes | June 8-14, 2011 | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/osseous/5903703724/sizes/m/in/photostream/ View on
Boundless.com
Working Capital Management
Cash
A business's cash account is how much currency it has on hand at a given time.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "American Cash." Public domain http://commons.wikimedia.org/wiki/File:American_Cash.JPG View on Boundless.com
Working Capital Management
Example Collection Letter
A sample collection settlement letter.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "All sizes | Debt Settlement Offer | Flickr - Photo Sharing!." CC BY http://www.flickr.com/photos/sercasey/512307249/sizes/z/in/photostream/ View on
Boundless.com
Working Capital Management
Manufacturing process
From raw materials to work in process to finished goods.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "MLCC-Manufacturing-Process." CC BY-SA http://commons.wikimedia.org/wiki/File:MLCC-Manufacturing-Process.png View on Boundless.com
Working Capital Management
A Marketable Security
A certificate of a $5 deposit in the United States Postal Savings System issued on September 10th, 1932.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "US Postal Savings System 5." CC BY-SA http://commons.wikimedia.org/wiki/File:US_Postal_Savings_System_5.jpg View on Boundless.com
Working Capital Management
Equation
Equation to determine the minimum point of the total cost curve.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikipedia. "Economic order quantity." GNU FDL http://en.wikipedia.org/wiki/Economic_order_quantity View on Boundless.com
Working Capital Management
Budgeting Example
A budget is essential to tracking and controlling money that is coming in to and being spent on a project.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Google. "Google Image Result for http://www.foxstone.com.au/images/accounting/hires/A11_big.jpg." CC BY
http://www.google.com/imgres?num=10&um=1&hl=en&authuser=0&biw=1275&bih=639&tbm=isch&tbnid=muW-WOTrf-i-
Working Capital Management
Equation 3
Equation solving for Q*
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikipedia. "Economic order quantity." GNU FDL http://en.wikipedia.org/wiki/Economic_order_quantity View on Boundless.com
Working Capital Management
Inflation
Inflation in France in 2002
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "Inflation 2002." CC BY-SA http://commons.wikimedia.org/wiki/File:Inflation_2002.png View on Boundless.com
Working Capital Management
ABC analysis
Actual distribution of ABC class in the electronics manufacturing company with 4051 active parts.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikipedia. "ABC analysis." GNU FDL http://en.wikipedia.org/wiki/ABC_analysis View on Boundless.com
Working Capital Management
Inventory
Inventories U.S. Army unit badges from a wall of military uniform items
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "U.S. Army unit badge inventory." CC BY-SA http://commons.wikimedia.org/wiki/File:U.S._Army_unit_badge_inventory.jpg View on Boundless.com
Working Capital Management
Accrual Recognition
This chart lays out methods for accruing revenue and expenses in accounting.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "y2cary3n6mng-76r9m3-accruals | Flickr - Photo Sharing!." CC BY-SA http://www.flickr.com/photos/sampjb/7690680336/in/photostream View on
Boundless.com
Working Capital Management
Markup
This equation shows the finding of selling price for a vendor by adding its markup to its cost.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "y2cary3n6mng-fwrdxb-markup-formula | Flickr - Photo Sharing!." CC BY-SA http://www.flickr.com/photos/sampjb/7690683622/in/photostream View on
Boundless.com
Working Capital Management
ABC techniques
Distribution of ABC class
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikipedia. "ABC analysis." GNU FDL http://en.wikipedia.org/wiki/ABC_analysis View on Boundless.com
Working Capital Management
Inventory control
Inventory control - inventory cost elements (holding cost, order cost, total)Parameters: Order-cost (C) 10, demand (D) 1000, holding cost (i) 20% (of
price), price (p) 10 => EOQ = 100
Free to share, print, make copies and changes. Get yours at www.boundless.com
Wikimedia. "Inventory-Control-Q-IC da." CC BY-SA http://commons.wikimedia.org/wiki/File:Inventory-Control-Q-IC_da.png View on Boundless.com
Working Capital Management
Floating Cash
In cash management, float can be utilized to make use of cash on hand for as long as possible.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Flickr. "All sizes | Torn & Cut One Dollar Note Floating Away in Small $ Pieces | Flickr - Photo Sharing!." CC BY
http://www.flickr.com/photos/42931449@N07/5299199423/sizes/m/in/photostream/ View on Boundless.com
Working Capital Management
Which of the following is a reason to always have cash on hand?
A) All of these answers.
B) It increases a company's liquidity.
C) It allows the company to meet its obligations without incurring
avoidable losses.
D) It can be used immediately to perform economic actions, such as
paying outstanding debts.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is a reason to always have cash on hand?
A) All of these answers.
B) It increases a company's liquidity.
C) It allows the company to meet its obligations without incurring
avoidable losses.
D) It can be used immediately to perform economic actions, such as
paying outstanding debts.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
The sum of cash revenues and expenditures over a period of
time.
A) Cash
B) Assets
C) Cash Flow
D) Account Receivables
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
The sum of cash revenues and expenditures over a period of
time.
A) Cash
B) Assets
C) Cash Flow
D) Account Receivables
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following statements regarding the cash flow cycle is
correct?
A) The cash conversion cycle is directly observed from a business's cash
flows.
B) The cash conversion cycle is written to analyze firms that conducts its
business solely using cash.
C) The cash flow cycle is also called the "cash conversion cycle" (CCC).
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following statements regarding the cash flow cycle is
correct?
A) The cash conversion cycle is directly observed from a business's cash
flows.
B) The cash conversion cycle is written to analyze firms that conducts its
business solely using cash.
C) The cash flow cycle is also called the "cash conversion cycle" (CCC).
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company has average inventory of $10 million and COGS of
$15 million. Its average accounts receivable is $1 million and it
had $3 million in credit sales. Its average accounts payable is
$1.5 million and it had $10 million in purchases. What is its CCC?
A) 419.75 days
B) 188.58 days
C) 365 days
D) 310.25
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company has average inventory of $10 million and COGS of
$15 million. Its average accounts receivable is $1 million and it
had $3 million in credit sales. Its average accounts payable is
$1.5 million and it had $10 million in purchases. What is its CCC?
A) 419.75 days
B) 188.58 days
C) 365 days
D) 310.25
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following is not a component included in a cash
budget?
A) Payments for mergers and acquisitions.
B) Purchases of assets.
C) Income taxes paid.
D) Depreciation expense.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is not a component included in a cash
budget?
A) Payments for mergers and acquisitions.
B) Purchases of assets.
C) Income taxes paid.
D) Depreciation expense.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following statements regarding float is correct?
A) Float represents duplicate money that exists during the time between
when a check is deposited and when that amount is withdrawn from the
sender's account.I
B) A company should try to decrease the amount of float associated with
its business.
C) Making purchases with credit cards decreases a company's float.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following statements regarding float is correct?
A) Float represents duplicate money that exists during the time between
when a check is deposited and when that amount is withdrawn from the
sender's account.I
B) A company should try to decrease the amount of float associated with
its business.
C) Making purchases with credit cards decreases a company's float.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following should a company ALWAYS do with
regards to its collection policy?
A) Demand upfront payment when the good or service is delivered.
B) Set up lock box banking for its customers' convenience.
C) Require a deposit from all customers for large purchases.
D) Tailor its collection policy based on each customer's needs and
importance.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following should a company ALWAYS do with
regards to its collection policy?
A) Demand upfront payment when the good or service is delivered.
B) Set up lock box banking for its customers' convenience.
C) Require a deposit from all customers for large purchases.
D) Tailor its collection policy based on each customer's needs and
importance.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following is an acceptable strategy for managing a
company's disbursements?
A) A company should distribute payroll after the point when banks will
clear checks for that week.
B) A company should always purchase products it needs to avoid longterm rental expenses.
C) A company should be overinsured to ensure that it has adequate
coverage.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is an acceptable strategy for managing a
company's disbursements?
A) A company should distribute payroll after the point when banks will
clear checks for that week.
B) A company should always purchase products it needs to avoid longterm rental expenses.
C) A company should be overinsured to ensure that it has adequate
coverage.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following is a reason a company would hold
marketable securities?
A) To serve as a substitute for cash balances.
B) To obtain a return instead of letting the funds remain idle.
C) All of these answers.
D) To ensure that the company can meet known financial requirements,
such as maturing bond issues.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is a reason a company would hold
marketable securities?
A) To serve as a substitute for cash balances.
B) To obtain a return instead of letting the funds remain idle.
C) All of these answers.
D) To ensure that the company can meet known financial requirements,
such as maturing bond issues.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
If a company has yet to receive payment for its goods, which of
the following describes a situation when it can recognize revenue
from the sale?
A) Once the company has sustained a portion of the costs associated
with providing the good or service.
B) Once the company has performed a portion of the services to be
provided.
C) All of these answers.
D) When the goods have been delivered and the title has been
transferred to the buyer.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
If a company has yet to receive payment for its goods, which of
the following describes a situation when it can recognize revenue
from the sale?
A) Once the company has sustained a portion of the costs associated
with providing the good or service.
B) Once the company has performed a portion of the services to be
provided.
C) All of these answers.
D) When the goods have been delivered and the title has been
transferred to the buyer.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following correctly defines one of the "Five C's of
Credit?"
A) Capital: Does the borrower have enough cash flow to make its
payments?
B) Capacity: Does the borrower have sufficient assets to secure the
loan?
C) Character: Is the borrower trustworthy with a history of meeting its
debt obligations?
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following correctly defines one of the "Five C's of
Credit?"
A) Capital: Does the borrower have enough cash flow to make its
payments?
B) Capacity: Does the borrower have sufficient assets to secure the
loan?
C) Character: Is the borrower trustworthy with a history of meeting its
debt obligations?
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A customer has 45 days from the date of invoice to pay a bill in
full, but if he pays within 15 days of the invoice, he gets a 10%
discount. Which of the following describes these terms of trade?
A) 15/10, net 45.
B) 10/45, net 15.
C) 15/45, net 10.
D) 10/15, net 45.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A customer has 45 days from the date of invoice to pay a bill in
full, but if he pays within 15 days of the invoice, he gets a 10%
discount. Which of the following describes these terms of trade?
A) 15/10, net 45.
B) 10/45, net 15.
C) 15/45, net 10.
D) 10/15, net 45.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following correctly describes a method companies
can use to analyze their collections?
A) The account receivable days is the average number of days it takes a
firm to collect on its sales.
B) An aging schedule categorizes accounts by the number of days they
have been on the books.
C) All of these answers.
D) The receivable turnover ratio measures the number of times, on
average, receivables are collected.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following correctly describes a method companies
can use to analyze their collections?
A) The account receivable days is the average number of days it takes a
firm to collect on its sales.
B) An aging schedule categorizes accounts by the number of days they
have been on the books.
C) All of these answers.
D) The receivable turnover ratio measures the number of times, on
average, receivables are collected.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
When a company has begun the manufacturing process on a
good, but it is not yet complete, that item is placed in _____.
A) work in process inventory.
B) raw materials inventory.
C) finished goods inventory.
D) goods for resale inventory.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
When a company has begun the manufacturing process on a
good, but it is not yet complete, that item is placed in _____.
A) work in process inventory.
B) raw materials inventory.
C) finished goods inventory.
D) goods for resale inventory.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company values its inventory by assuming that the most
recently produced items are sold first. This inventory valuation
method is known as ___.
A) LIFO
B) FIFO
C) Weighted Average Cost Method
D) Moving Average Cost Method
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company values its inventory by assuming that the most
recently produced items are sold first. This inventory valuation
method is known as ___.
A) LIFO
B) FIFO
C) Weighted Average Cost Method
D) Moving Average Cost Method
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company uses ABC analysis to manage its inventory and it has
just adopted a new product. While this new product is an
important part of the company's sales, it is relatively cheap to
manufacture and is not prone to expiring. It should be ___.
A) an A item.
B) a B item.
C) a C item.
D) accounted for separately outside of the current inventory system.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company uses ABC analysis to manage its inventory and it has
just adopted a new product. While this new product is an
important part of the company's sales, it is relatively cheap to
manufacture and is not prone to expiring. It should be ___.
A) an A item.
B) a B item.
C) a C item.
D) accounted for separately outside of the current inventory system.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company that manufactures 4th of July decorations is looking to
improve its inventory management. Which of the following should
it consider as it redesigns its inventory system?
A) It should review its past sales data to determine the pattern of demand
for its goods.
B) It should calculate the lag time in its supply chain.
C) It should analyze its cash flow so it has enough cash to purchase its
stock.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company that manufactures 4th of July decorations is looking to
improve its inventory management. Which of the following should
it consider as it redesigns its inventory system?
A) It should review its past sales data to determine the pattern of demand
for its goods.
B) It should calculate the lag time in its supply chain.
C) It should analyze its cash flow so it has enough cash to purchase its
stock.
D) All of these answers.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
How does inflation influence inventory levels?
A) As inflation increases, inventories tend to decrease.
B) Inflation does not effect inventory levels.
C) As inflation increases, inventories tend to increase.
D) As inflation increases, companies lock in their inventories at preinflationary levels.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
How does inflation influence inventory levels?
A) As inflation increases, inventories tend to decrease.
B) Inflation does not effect inventory levels.
C) As inflation increases, inventories tend to increase.
D) As inflation increases, companies lock in their inventories at preinflationary levels.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company values its inventory by dividing the total cost of goods
available for sale by the sum of the beginning inventory balance
and the total amount of purchases made during the period. This
method is known as ___.
A) Moving-Average Cost.
B) Specific Identification.
C) LIFO.
D) Weighted Average Cost.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company values its inventory by dividing the total cost of goods
available for sale by the sum of the beginning inventory balance
and the total amount of purchases made during the period. This
method is known as ___.
A) Moving-Average Cost.
B) Specific Identification.
C) LIFO.
D) Weighted Average Cost.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
A company has a holding cost per unit of $5. Each order has a
fixed cost of $8 and the annual demand quantity is 150,000 units.
What is the company's optimal order quantity?
A) 693 units
B) 1550 units
C) 490 units
D) 245 units
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
A company has a holding cost per unit of $5. Each order has a
fixed cost of $8 and the annual demand quantity is 150,000 units.
What is the company's optimal order quantity?
A) 693 units
B) 1550 units
C) 490 units
D) 245 units
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following is NOT a benefit of using the Just-In-Time
(JIT) inventory system?
A) JIT minimizes the risk of flow interruption.
B) JIT decreases setup time for manufacturing processes.
C) Employees with multiple skills are used more efficiently.
D) There is a smaller chance of inventory breaking or expiring.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is NOT a benefit of using the Just-In-Time
(JIT) inventory system?
A) JIT minimizes the risk of flow interruption.
B) JIT decreases setup time for manufacturing processes.
C) Employees with multiple skills are used more efficiently.
D) There is a smaller chance of inventory breaking or expiring.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following is the primary purpose of inventory
management?
A) To improve business cash flows.
B) To establish production goals.
C) To ensure that customers get their product while minimizing inventory
costs for the company.
D) To monitor the amount of material into and out of stockroom locations.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following is the primary purpose of inventory
management?
A) To improve business cash flows.
B) To establish production goals.
C) To ensure that customers get their product while minimizing inventory
costs for the company.
D) To monitor the amount of material into and out of stockroom locations.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Which of the following statements correctly states a risk
associated with inventory management?
A) Excessive inventory limits the company's growth potential.
B) Inadequate inventory will result insufficient materials for production.
C) All of these answers.
D) Managing inventory is complicated due to factors like inflation and
seasonality.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
Which of the following statements correctly states a risk
associated with inventory management?
A) Excessive inventory limits the company's growth potential.
B) Inadequate inventory will result insufficient materials for production.
C) All of these answers.
D) Managing inventory is complicated due to factors like inflation and
seasonality.
Free to share, print, make copies and changes. Get yours at www.boundless.com
Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/
Working Capital Management
Attribution
• Wikipedia. "Inventory." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inventory
• Wikipedia. "Work in process." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Work_in_process
• Wiktionary. "supply chain." CC BY-SA 3.0 http://en.wiktionary.org/wiki/supply+chain
• Wikipedia. "Inflation." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inflation
• Wikipedia. "physical capital." CC BY-SA 3.0 http://en.wikipedia.org/wiki/physical%20capital
• Wiktionary. "purchasing power." CC BY-SA 3.0 http://en.wiktionary.org/wiki/purchasing+power
• Wikipedia. "Cash conversion cycle." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_conversion_cycle
• Wiktionary. "retail." CC BY-SA 3.0 http://en.wiktionary.org/wiki/retail
• Wiktionary. "balance sheet." CC BY-SA 3.0 http://en.wiktionary.org/wiki/balance+sheet
• Wiktionary. "cash flow." CC BY-SA 3.0 http://en.wiktionary.org/wiki/cash+flow
• Wikipedia. "Cash conversion cycle." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_conversion_cycle
• Wikipedia. "Credit Sales." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Credit%20Sales
• Wikipedia. "ABC analysis." CC BY-SA 3.0 http://en.wikipedia.org/wiki/ABC_analysis
• Wikipedia. "Just in Time." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Just%20in%20Time
• Wikipedia. "Inventory management." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inventory_management
• Wikipedia. "holding cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/holding%20cost
• Wikipedia. "seasonality." CC BY-SA 3.0 http://en.wikipedia.org/wiki/seasonality
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• Wikipedia. "Asset." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Asset#Current_assets
• Answers.com. "In the management of cash and marketable securities why should the primary concern be for safety AND
liquidity rather than profit maximization." CC BY-SA
http://wiki.answers.com/Q/In_the_management_of_cash_and_marketable_securities_why_should_the_primary_concern_be_fo
r_safety_AND_liquidity_rather_than_profit_maximization
• Wiktionary. "commercial paper." CC BY-SA 3.0 http://en.wiktionary.org/wiki/commercial+paper
• OER Commons. CC BY http://www.oercommons.org/courses/managing-cash-flow/view
• Wikipedia. "Float (money supply)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Float_(money_supply)
• Wikipedia. "check kiting." CC BY-SA 3.0 http://en.wikipedia.org/wiki/check%20kiting
• Wiktionary. "outsourcing." CC BY-SA 3.0 http://en.wiktionary.org/wiki/outsourcing
• OER Commons. CC BY http://www.oercommons.org/courses/managing-cash-flow/view
• Wikipedia. "Lock box." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Lock_box
• Wikipedia. "Lockbox." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Lockbox
• Wikipedia. "invoicing." CC BY-SA 3.0 http://en.wikipedia.org/wiki/invoicing
• OER Commons. CC BY http://www.oercommons.org/courses/managing-cash-flow/view
• Wikipedia. "Discounts and allowances." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Discounts_and_allowances
• Wikipedia. "Credit worthiness." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Credit_worthiness
• Wikispaces. "SU3FINANCE - Chapter 18 - Working Capital Management." CC BY-SA
http://su3finance.wikispaces.com/Chapter+18+-+Working+Capital+Management
• Wikipedia. "Debtor collection period." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Debtor_collection_period
• Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/collection-policy
• Wiktionary. "collateral." CC BY-SA 3.0 http://en.wiktionary.org/wiki/collateral
• Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/bad-debt-losses
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• Wikipedia. "Weighted Average Cost." CC BY-SA 3.0
http://en.wikipedia.org/wiki/Weighted_Average_Cost#Weighted_Average_Cost
• Wikipedia. "Moving-Average Cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Moving-Average_Cost#Moving-Average_Cost
• Wikipedia. "Inventory." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inventory#Inventory_management
• Wikipedia. "FIFO and LIFO accounting." CC BY-SA 3.0 http://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting
• Wikipedia. "Specific Identification." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Specific_Identification
• Wikipedia. "ABC analysis." CC BY-SA 3.0 http://en.wikipedia.org/wiki/ABC%20analysis
• Wikipedia. "Inventory management." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inventory_management
• Wikipedia. "ABC analysis." CC BY-SA 3.0 http://en.wikipedia.org/wiki/ABC%20analysis
• Wikipedia. "holding cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/holding%20cost
• Wikipedia. "Cash." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash
• Wikipedia. "Liquidity." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Liquidity
• Wiktionary. "liquidity." CC BY-SA 3.0 http://en.wiktionary.org/wiki/liquidity
• Wiktionary. "money market." CC BY-SA 3.0 http://en.wiktionary.org/wiki/money+market
• Wikipedia. "Dividend." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Dividend
• Wikipedia. "Budget." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Budget
• Wikipedia. "Cash flow statement." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_flow_statement
• Wikipedia. "Accounts receivable." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Accounts_receivable
• Wikipedia. "stockholders." CC BY-SA 3.0 http://en.wikipedia.org/wiki/stockholders
• Wikipedia. "mergers and acquisitions." CC BY-SA 3.0 http://en.wikipedia.org/wiki/mergers%20and%20acquisitions
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• Wikipedia. "FIFO and LIFO accounting." CC BY-SA 3.0 http://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting
• Wikipedia. "Average cost method." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Average_cost_method
• Wikipedia. "taxable income." CC BY-SA 3.0 http://en.wikipedia.org/wiki/taxable%20income
• Wikipedia. "Accounts receivable." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Accounts_receivable
• Wikibooks. "ERP Internals/Modules/Accounts Receivable." CC BY-SA 3.0
http://en.wikibooks.org/wiki/ERP_Internals/Modules/Accounts_Receivable
• Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//accounting/definition/accrual-accounting
• Wikipedia. "Accounts receivable." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Accounts_receivable
• Wikipedia. "Net D." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Net_D
• Wikipedia. "Trade credit." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Trade_credit
• Wikispaces. "SU3FINANCE - Chapter 18 - Working Capital Management." CC BY-SA
http://su3finance.wikispaces.com/Chapter+18+-+Working+Capital+Management
• Wiktionary. "franchising." CC BY-SA 3.0 http://en.wiktionary.org/wiki/franchising
• Wikispaces. "SU3FINANCE - Chapter 18 - Working Capital Management." CC BY-SA
http://su3finance.wikispaces.com/Chapter+18+-+Working+Capital+Management
• Wikipedia. "Trade credit insurance." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Trade_credit_insurance
• Wikipedia. "Collection agency." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Collection_agency
• Wikipedia. "Receivables turnover ratio." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Receivables_turnover_ratio
• Wiktionary. "subsidiary." CC BY-SA 3.0 http://en.wiktionary.org/wiki/subsidiary
• Wikipedia. "creditors." CC BY-SA 3.0 http://en.wikipedia.org/wiki/creditors
• Wikipedia. "Economic order quantity." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Economic_order_quantity
• Wikipedia. "holding cost." CC BY-SA 3.0 http://en.wikipedia.org/wiki/holding%20cost
Free to share, print, make copies and changes. Get yours at www.boundless.com
Working Capital Management
• Merlot. "Single-period Inventory Analysis." CC BY http://www.merlot.org/merlot/viewMaterial.htm?id=79931
• Wikipedia. "Seasonal adjustment." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Seasonal_adjustment
• Wikipedia. "Inventory." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Inventory#High-level_inventory_management
• Wikipedia. "seasonality." CC BY-SA 3.0 http://en.wikipedia.org/wiki/seasonality
• Wiktionary. "supply chain." CC BY-SA 3.0 http://en.wiktionary.org/wiki/supply+chain
• Wikipedia. "Just in time (business)." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Just_in_time_(business)
• Wikipedia. "carrying costs." CC BY-SA 3.0 http://en.wikipedia.org/wiki/carrying%20costs
Free to share, print, make copies and changes. Get yours at www.boundless.com