LU3

Question 1

cash management refers to

Answer 1

management of cash balances, cash flow and short term investment in securities

Question 2

cash consists of

Answer 2

petty cash(changes)
cash on hand(operational purposes)
cash in bank(demand and time deposits)

Question 3

sufficient cash is needed to cover:

Answer 3

short term debts

operational expenses

Question 4

What does minimum cash balance should cover and provide?

Answer 4

risk of cash shortfalls
adequate petty cash
adequate house banks
cover cheques issued

Question 5

What do investors monitor and why?

Answer 5

cash flow statements especially! To determine whether the operation had sufficient cash to pay dividend and will be jn the future

Question 6

working capital

Answer 6

currents assets-current liabilities

Question 7

importance of positive working capital important for creditors and owners alike?

Answer 7

for creditors if hotel can pay current debts

to have sufficient cash to pay expenses

Question 8

oc

Answer 8

acp,ihp,pdp,ccc

Question 9

what results in income flows?where is it shown and and what does it reflect?

Answer 9

generating revenues and incurring expenses
shown on income statement
reflect result of operations

Question 10

cash flows consists of? And what can happen?

Answer 10

receipt and disbursement of cash

possible to genrate profit and have a negative cash flow

Question 11

cash budget

Answer 11

estimated cash receipts and cash disbursements

if not enough management has to take action

Question 12

6 factors to take into consideration when investing excess cash

Answer 12

risk
return
liquidity
cost
size
time

Question 13

2 basic approaches

Answer 13

cash receipts and disbursement(beyond 6 months)

adjusted net income( longer than 6 months)

Question 14

float

Answer 14

time between happening on account and actual addition/substraction

Question 15

managing accounts receivable

Answer 15

credit selection and standers
terms
monitoring

Question 16

What happens when you relax credit standards?

Answer 16

increase sales = CM
increase in investment costs on acc rec.
increase in bad dept expense

Question 17

Why is inventory surplus negative?

Answer 17

ties up cash

Question 18

managing payables

Answer 18

trade payable

short-term bank loans

Question 19

improving cash availability

Answer 19

pay in a advance:)
sell marketable securities:)
spend less on inventory:)
delay payment to supplier:/
borrow on short term:/
postpone dividend payment:/
sell capital stock:/
borrow on long term:(

Question 20

managing payables:how to pay “less”?

Answer 20

pay only when due(reinvest)
aim for interest free credit
consider cash discounts

Question 21

When managing acc receivable towards customer what does have to be taken into consuderstion?

Answer 21

• ask for bank guarantee
• do i need additional cash for brig projects? —–should i give this now?
• collection techniques: letters, calls, agencies or even sell it