AFP Treasury Learning System – Module 3A by AFP -- Read -- Imperial Library of Trantor

Index

Table of Contents Author’s Acknowledgements About the Author Members of the 2014-2016 CTP BOK Committee Chapter 8: Introduction to Working Capital Management

Introduction Overview of Working Capital

Operating Cash Flows and Timelines Float

The Working Capital Cash Conversion Cycle (CCC)

Days’ Inventory (DI) or Inventory Conversion Period Days’ Receivables (DR) or Receivables Conversion Period Days’ Payables (DP) or Payables Conversion Period Calculating the Cash Conversion Cycle (CCC) Evaluating the Impact of Changes to the Cash Flow Timeline

How Changes in Current Accounts Impact External Financing

Changes in Current Assets Changes in Current Liabilities External Financing Requirements

Working Capital Investment and Financing Strategies

Current Asset Investment Strategies Current Asset Financing Strategies

Management of Credit and Accounts Receivable (A/R)

Relationship between Treasury and Credit Management Trade Credit Policies Billing and Collection Methods Forms of Credit Extension Cash Application Considerations Pertaining to Terms of Sale Financing Accounts Receivable (A/R)

Management of Inventory

Elements of Basic Inventory Policy Inventory Financing Alternatives

Management of Accounts Payable (A/P)

Disbursement System Considerations Types of A/P and Disbursement Systems

Multinational Working Capital Management Tools

Multicurrency Accounts Netting Leading and Lagging Re-invoicing Internal Factoring In-house Banking Export Financing

Summary Chapter 8: Test Your Understanding Chapter 8: Answers

Chapter 9: Working Capital Metrics

Introduction Basic Financial Concepts

Time Value of Money Opportunity Cost Cost of Capital

Fundamental Working Capital Metrics

Current Ratio Quick Ratio Cash Flow to Total Debt Ratio Total Working Capital

Calculation of the Cash Conversion Cycle (CCC)

Days’ Sales in Inventory (DSI) or Days’ Inventory (DI) Days’ Receivables (DR) Days’ Payables (DP) or Days’ Payable Outstanding (DPO) Cash Conversion Cycle (CCC) Cash Turnover Days of Working Capital (DWC) Cash Conversion Efficiency

Cash Discount Calculations

Costs to a Buyer of Not Taking the Cash Discount Financial Impact to a Seller of Offering a Cash Discount

Accounts Receivable (A/R) Monitoring and Control

Days’ Sales Outstanding (DSO) A/R Aging Schedule A/R Balance Pattern

Collections and Concentration Calculations

Lockbox Cost/Benefit Analysis Cash Concentration Break-Even Analysis

Summary Chapter 9: Test Your Understanding Chapter 9: Answers

Chapter 10: Collections, Concentration, and Disbursements

Introduction Disbursements

Disbursement Management Products Electronic Disbursement Products Card Payments Outsourced Accounts Payable (A/P) Services Managing Disbursement Information

Collections

Collecting Payments Domestic Collection Products Cross-Border Collections and Trade Management Products

Concentration of Funds

Domestic Concentration of Funds Global Concentration of Funds

Payments Fraud Summary Appendix 10.1: US ACH Standard Entry Class (SEC) Codes and Payment Types Chapter 10: Test Your Understanding Chapter 10: Answers

Chapter 11: Short-Term Investing and Borrowing

Introduction Managing Short-Term Investments

In-House versus Outsourced Management of Short-Term Investment Portfolio Short-Term Investment Policies Investment Strategies Reporting Securities Safekeeping and Custody Services Investment Risk Considerations

Pricing and Yields on Short-Term Investments

Factors Influencing Investment Pricing Yield Calculations for Short-Term Investments

Managing Short-Term Financing

Short-Term Funding Alternatives Pricing and Costs of Principal Short-Term Financing Sources

Debt Financing

Costs of Borrowing Basic Components of Interest Rates Base Rates Short-Term versus Long-Term Borrowing Loan Agreements and Covenants Credit Rating Agencies (CRAs)

Summary Appendix 11.1: Listing of Some Major Credit Rating Agencies Chapter 11: Test Your Understanding Chapter 11: Answers

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