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注会综合阶段英语水平提升班——第六单元5

t-admin154 网校老师 发表于 2017-10-29 16:31:41 | 评论:0  查看:556次 [注会英语]
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Unit 6  Financial management
4. Working capital management
4.1General introduction
The decision regarding the level of overall investment in working capital(营运资本投资) is a cost/benefit trade-off ——liquidity versus profitability, or cash flow versus profits.
A firm choosing to have a lower level of working capital than rivals is said to have an “aggressive” (激进型)approach, whereas a firm with a higher level of working capital has a “conservative”(保守型) approach.
An aggressive approach will result in higher profitability and higher risk, while a conservative approach will result in lower profitability and lower risk.
Advantage of keeping it high
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Advantage of keeping it low
Few stock-outs
Bulk purchase discounts
Reduced ordering costs
Inventory
(存货)
Less cash tied up in inventory
Lower storage costs
flexibility
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+
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Customers like credit, so profitable as attracts more sales
Receivable
(应收账款)
Less cash tied up
Less chance of irrecoverable debts
Reduced costs of credit control
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+
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Able to pay bills on time
Take advantage of unexpected opportunities
Avoid high borrowing cost
Cash
现金)
Can invest surplus to earn higher returns
Less vulnerable to takeover
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=
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Current assets
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-
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Preserves own cash-cheap source of finance
Trade payables
(应付账款)
Can take advantage of prompt payment discounts
Retain good credit status
More favorable supplier treatment
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=
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Working capital
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Working capital management refers to decisions made about a firm’s short-term assets and liabilities. Working capital management policies are generally categorized as aggressive (激进型),conservative (保守型), or moderate (matching) (匹配型).
1)Aggressive- finance most current assets, including “permanent” ones, with short-term finance. Risky but profitable.
短期金融负债不但融通临时性流动资产的资金需要,还解决部分长期性资产的资金需要。
2)Conservative- long-term finance is used for most current assets, including a proportion of fluctuating current assets. Stable but expensive.
短期金融负债只融通部分临时性流动资产的资金需要,另一部分临时性流动资产和长期性资产,则由长期资金来源支持。
3)Matching- the duration of the finance is matched to the duration of the investment.
长期投资由长期资金支持,短期投资由短期资金支持。
Working capital management consists of cash and securities management, receivables management, inventory management, and short-term credit management. Its goal is to minimize both the operating cycle and the cash cycle.
The operating cycle (经营周期)is the number of days of inventory on hand plus the receivables collection period.
The cash cycle(现金周期)is the operating cycle less the accounts payable payment cycle.
Both cycles are minimized by decreasing the number of days inventory on hand and the receivables collection period while maximizing the accounts payable payment cycle.

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