financial management strategies Flashcards
what is the acronym for financial management strategies
GWCP
what is the role of cash flow management
matching cash flow in with cash flow out is the basis of sustainable cash flow management
what does GWCP stand for
global financial management
working capital management
cash flow management
profitability management
what do cash flow statements do
they record the movement of cash receipts and payments over a period of time
what are the cash flow management strategies
distribution of payments, leasing and discounts for early payment
what does distribution of payments refer to
it refers to distributing payments throughout the month or year so expenses aren’t due at the same time - thus ensuring there are no large cash outflows at any given time.
define discounts for early payment
it involves offering debtors a discount for repaying debts early
what is the usual credit term for discounts for early payments
30 days
define factoring
involves selling the accounts receivable to a third party for a discounted price of usually 90% of the total accounts receivable
what is the role of working capital management
working capital management refers to the funds available to cover short-term financial commitments
what is the importance of cash flow management
cash flow statement allows businesses to monitor payments and implement corrective action if needed
what is the formula for net working capital
current assets - current liabilities.
what does working capital management involve
it involves determining the best mix of current assets and current liabilities to achieve the objectives of the business
