Cash-Management課件

1、Corporate Finance Ross Westerfield JaffeSixth EditionSixth Edition28Chapter Twenty Eight Cash ManagementChapter Outline28.1 Reasons for Holding Cash28.2 Determining the Target Cash Balance28.3 Managing the Collection and Disbursement of Cash28.4 Investing Idle Cash28.5 Summary & Conclusions28.1 Reas

2、ons for Holding CashTransactions motiveCompensating balances28.2 Determining the Target Cash BalanceThe Baumol ModelThe Miller-Orr ModelOther Factors Influencing the Target Cash BalanceCosts of Holding CashOpportunity CostsTrading costsTotal cost of holding cashC*Costs in dollars of holding cashSize

3、 of cash balanceThe investment income foregone when holding cash.Trading costs increase when the firm must sell securities to meet cash needs.The Baumol ModelF = The fixed cost of selling securities to raise cashT = The total amount of new cash neededK = The opportunity cost of holding cash: this is

4、 the interest rate.TimeCIf we start with $C, spend at a constant rate each period and replace our cash with $C when we run out of cash, our average cash balance will be .1 2 3The opportunity cost of holding is The Baumol ModelF = The fixed cost of selling securities to raise cashT = The total amount

5、 of new cash neededK = The opportunity cost of holding cash: this is the interest rate.TimeCAs we transfer $C each period we incur a trading cost of F each period. If we need T in total over the planning period we will pay $F, T C times.1 2 3The trading cost is The Baumol ModelC*Size of cash balance

6、Opportunity CostsTrading costsThe optimal cash balance is found where the opportunity costs equals the trading costsThe Baumol ModelOpportunity Costs = Trading CostsThe optimal cash balance is found where the opportunity costs equals the trading costsMultiply both sides by CThe Miller-Orr ModelThe f

7、irm allows its cash balance to wander randomly between upper and lower control limits.$TimeHZLWhen the cash balance reaches the upper control limit H cash is invested elsewhere to get us to the target cash balance Z.When the cash balance reaches the lower control limit, L, investments are sold to ra

8、ise cash to get us up to the target cash balance.The Miller-Orr Model MathGiven L, which is set by the firm, the Miller-Orr model solves for Z and Hwhere s2 is the variance of net daily cash flows.The average cash balance in the Miller-Orr model is Implications of the Miller-Orr ModelTo use the Mill

9、er-Orr model, the manager must do four things:Set the lower control limit for the cash balance.Estimate the standard deviation of daily cash flows.Determine the interest rate. Estimate the trading costs of buying and selling securities.The model clarifies the issues of cash management: The best retu

10、rn point, Z, is positively related to trading costs, F, and negatively related to the interest rate K.Z and the average cash balance are positively related to the variability of cash flows.Other Factors Influencing the Target Cash BalanceBorrowingBorrowing is likely to be more expensive than selling

11、 marketable securities.The need to borrow will depend on managements desire to hold low cash balances.Compensating BalanceFirms have cash in the bank as a compensation for banking services.Large corporations have thousands of accounts with several dozen bankssometimes it makes more sense to leave ca

12、sh alone than to manage each account on a daily basis.FloatThe difference between bank cash and book cash is called float.Float management involves controlling the collection and disbursement of cash.28.3 Managing the Collection and Disbursement of CashAccelerating CollectionsDelaying DisbursementsD

13、isbursement FloatZero-Balance AccountsDraftsEthical and Legal QuestionsAccelerating CollectionsCustomer mails paymentCompany receives paymentCompany deposits paymentCash receivedMail delayMail floatProcessing delayProcessing floatClearing delayClearing floattimeCollection floatOverview of Lockbox Pr

14、ocessing Corporate Customers Corporate Customers Corporate Customers Corporate Customers Local Bank Collects funds from PO Boxes Envelopes opened; separation of checks and receipts Deposit of checks into bank accounts Details of receivables go to firm Firm processes receivables Bank clears checks Po

15、st Office Box 1 Post Office Box 2Delaying DisbursementsWrite check on a distant bank.Hold payment for several days after postmarked in office.Call supplier firm to verify statement accuracy for large amounts.Mail from distant post office.Mail from post office that requires a great deal of handling.

16、Firm prepares check to supplier Post Officeprocessing Delivery of check to supplier Deposit goes to suppliers bank Bank collects fundsDraftsFirms sometimes use drafts instead of checks.Drafts differ from checks because they are not drawn on a bank but on an issuer (the firm) and are payable by the i

17、ssuer.The bank acts only as an agent, presenting the draft to the issuer for payment.When the draft is transmitted to a firms bank for collection, the bank must present the draft to the issuing firm for acceptance before making payment. After the draft has been accepted, the firm must deposit the ne

18、cessary cash to cover the payments.This allows the firm to keep less cash on hand.Ethical and Legal QuestionsThe financial managers must always work with collected company cash balances and not with the companys book balance, which reflects checks that have been deposited but not collected. If you a

19、re borrowing the banks money without their knowledge, you are raising serious ethical and legal questions.28.4 Investing Idle CashA firm with surplus cash can park it in the money market.Some large firms and many small ones use money market mutual funds.Firms have surplus cash for three reasons:Seas

20、onal or Cyclical ActivitiesPlanned ExpendituresDifferent Types of Money Market SecuritiesSeasonal Cash DemandsLong-term financingShort-term financingTimeTotal Financing needsJFMAMMarketable securitiesBank loans28.5 Summary & ConclusionsA firm holds cash to conduct transactions and to compensate bank

21、s for the various services they render.The optimal amount of cash for a firm to hold depends on the opportunity cost of holding cash and the uncertainty of future cash inflows and outflows.Two transactions models that provide rough guidelines for determining the optimal cash postion are:The Miller-O

22、rr modelThe Baumol model28.5 Summary & ConclusionsThe firm can make use of a variety of procedures to manage the collection and disbursement of cash in such as way as to speed up the collection of cash and slow down payments.Some methods to speed collections areLockboxesConcentration bankingWire tra

23、nsfersThe financial managers must always work with collected company cash balances and not with the companys book balance. 28.5 Summary & ConclusionsIf you are borrowing the banks money without their knowledge, you are raising serious ethical and legal questions.The answers to which you probably kno

24、w by now.Corporate Finance Ross Westerfield JaffeSixth EditionSixth Edition29Chapter Twenty Nine Credit ManagementChapter Outline29.1 Terms of the Sale29.2 The Decision to Grant Credit: Risk and Information 29.3 Optimal Credit Policy29.4 Credit Analysis29.5 Collection Policy29.6 How to Finance Trade

25、 Credit29.7 Summary & ConclusionsIntroductionA firms credit policy is composed of:Terms of the saleCredit analysisCollection policyThis chapter discusses each of the components of credit policy that makes up the decision to grant credit.The Cash Flows of Granting CreditCredit sale is madeCustomer ma

26、ils checkFirm deposits checkBank credits firms accountAccounts receivableCash collectionTime29.1 Terms of the SaleThe terms of sale of composed ofCredit PeriodCash DiscountsCredit InstrumentsCredit PeriodCredit periods vary across industries.Generally a firm must consider three factors in setting a

27、credit period:The probability that the customer will not pay.The size of the account.The extent to which goods are perishable.Lengthening the credit period generally increases salesCash DiscountsOften part of the terms of sale.Tradeoff between the size of the discount and the increased speed and rat

28、e of collection of receivables.An example would be “3/10 net 30”The customer can take a 3% discount if he pays within 10 days.In any event, he must pay within 30 days.The Interest Rate Implicit in 3/10 net 30A firm offering credit terms of 3/10 net 30 is essentially offering their customers a 20-day

29、 loan.To see this, consider a firm that makes a $1,000 sale on day 0Some customers will pay on day 10 and take the discount.Other customers will pay on day 30 and forgo the discount.01030$97001030$1,00001030+$970-$1,000A customer that forgoes the 3% discount to pay on day 30 is borrowing $970 for 20

30、 days and paying $30 interest: The Interest Rate Implicit in 3/10 net 30Credit InstrumentsMost credit is offered on open accountthe invoice is the only credit instrument.Promissory notes are IOUs that are signed after the delivery of goodsCommercial drafts call for a customer to pay a specific amoun

31、t by a specific date. The draft is sent to the customers bank, when the customer signs the draft, the goods are sent.Bankers acceptances allow a bank to substitute its creditworthiness for the customer, for a fee.Conditional sales contracts let the seller retain legal ownership of the goods until th

32、e customer has completed payment.29.2 The Decision to Grant Credit: Risk and Information Consider a firm that is choosing between two alternative credit policies:“In God we trusteverybody else pays cash.”O(jiān)ffering their customers credit. The only cash flow of the first strategy is The expected cash f

33、lows of the credit strategy are:01We incur costs up frontand get paid in 1 period by h% of our customers.29.2 The Decision to Grant Credit: Risk and Information The NPV of the cash only strategy isThe NPV of the credit strategy isThe decision to grant credit depends on four factors:The delayed reven

34、ues from granting credit,The immediate costs of granting credit,The probability of repayment, hThe discount rate, rBExample of the Decision to Grant CreditA firm currently sells 1,000 items per month on a cash basis for $500 each.If they offered terms net 30, the marketing department believes that t

35、hey could sell 1,300 items per month.The collections department estimates that 5% of credit customers will default.The cost of capital is 10% per annum.Example of the Decision to Grant CreditThe NPV of cash only:The NPV of Net 30:Example of the Decision to Grant CreditHow high must the credit price

36、be to make it worthwhile for the firm to extend credit?The NPV of Net 30 must be at least as big as the NPV of cash only:The Value of New Information about Credit RiskThe most that we should be willing to pay for new information about credit risk is the present value of the expected cost of defaults

37、: In our earlier example, with a credit price of $500, we would be willing to pay $26,000 for a perfect credit screen.Future Sales and the Credit DecisionDo not give creditGive creditCustomer pays h = 100%Customer pays (Probability = h)Customer defaults(Probability = 1 h)Give creditDo not give credi

38、tOur first decision:We refuse further sales to deadbeats.We face a more certain credit decision with our paying customers:Information is revealed at the end of the first period:29.3 Optimal Credit PolicyCarrying CostsTotal costsC*Costs in dollarsLevel of credit extended At the optimal amount of cred

39、it, the incremental cash flows from increased sales are exactly equal to the carrying costs from the increase in accounts receivable. Opportunity costs29.3 Optimal Credit PolicyTrade Credit is more likely to be granted if:The selling firm has a cost advantage over other lenders.The selling firm can

40、engage in price discrimination.The selling firm can obtain favorable tax treatment.The selling firm has no established reputation for quality products or services.The selling firm perceives a long-term strategic relationship.The optimal credit policy depends on the characteristics of particular firms.29