Principles of Corporate Finance

The Credit Decision The credit decision and its probable payoffs Refuse credit Offer credit Customer pays = p Customer defaults ...

The Credit Decision The credit decision and its probable payoffs Refuse credit Offer credit Customer pays = p Customer defaults ...

The Credit Decision w Based on the probability of payoffs, the expected profit can be expressed as: ...

The Credit Decision w Based on the probability of payoffs, the expected profit can be expressed as: p x PV(Rev - Cost) - (1 - p) ...

The Credit Decision w Based on the probability of payoffs, the expected profit can be expressed as: w The break even probability ...

Collection Policy Collection Policy - Procedures to collect and monitor receivables. Aging Schedule - Classification of accounts ...

Collection Policy Sample aging schedule for accounts receivable Total $200,000 $40,000 $58,000 $298,000 Omega 5,000 4,000 21,000 ...

u Cash Management Principles of Corporate Finance Brealey and Myers Sixth Edition Chapter 31 ...

Topics Covered w Inventories and Cash Balances w Cash Collection and Disbursement Systems ËFloat w Bank Relations ...

Inventories & Cash Balances Economic Order Quantity - Order size that minimizes total inventory costs. Economic Order Quanti ...

Inventories & Cash Balances Determination of optimal order size Inventory costs, dollars Order size Total costs Carrying cos ...

Inventories & Cash Balances w The optimal amount of short term securities sold to raise cash will be higher when annual cash ...

Inventories & Cash Balances w Money Market - market for short term financial assets. Ëcommercial paper Ëcertificates of depo ...

Inventories & Cash Balances Value of bills sold = Q = 2 x annual cash disbursement x cost per sale interest rate 2 x 1260 x ...

Float w Time exists between the moment a check is written and the moment the funds are deposited in the recipient’s account. w T ...

Float Payment Float illustration - The company issues a $200,000 check that has not yet cleared. ...

Float Payment Float illustration - The company issues a $200,000 check that has not yet cleared. Company’s ledger balance $800,0 ...

Float Payment Float illustration - The company issues a $200,000 check that has not yet cleared. Company’s ledger balance $800,0 ...

Float Availability Float illustration - The company deposits a $100,000 check that has not yet cleared. ...

Float Availability Float illustration - The company deposits a $100,000 check that has not yet cleared. Company’s ledger balance ...