Essentials of Working Capital Management

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  • Edition: 1st
  • Format: Paperback
  • Copyright: 2010-11-23
  • Publisher: Wiley
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The focus of this book is on businesses can continue to be successful in these difficult times, specifically in relation to the limited credit available to businesses along with other short term funds. Written in the easy-to-follow Essentials Series style, it covers the main components of working capital: The efficient utilization of current assets and current liabilities of a firm throughout each phase of the busi-ness operating cycle. The planning, monitoring, and manage-ment of the company's collections, disbursements and bank account balances. The management of receivables, inventories and payables to minimize investment in idle resources. The gathering and management of information and forecast data to ef-fectively use available funds and identify risk.

Author Biography

James S. Sagner, PhD, is Associate Professor in the School of Business at the University of Bridgeport and teaches in the executive education program at the University of North Carolina. In addition, he is Senior Managing Principal of Sagner/Marks, a working capital consulting firm. Dr. Sagner is the author of six previous books, including, as coauthor Essentials of Managing Corporate Cash (Wiley), as well as some fifty articles and papers on finance and economics. He is a former Rockefeller Foundation Fellow and is recognized as an expert in financial management, with clients that include leading insurance companies, securities firms, finance companies, banks, hospitals, manufacturing companies, and service organizations.

Table of Contents

Prefacep. xi
Acknowledgmentsp. xv
Concepts in Working Capital Managementp. 1
Working Capital Conceptsp. 1
Ratio Analysisp. 7
Working Capital Ratiosp. 7
Significance of Working Capitalp. 12
Applying These Ideas to a Real Businessp. 15
Summaryp. 18
Cash-Transactions, Banking and Credit, and Financial Instrumentsp. 19
Comprehensive Case: Widget Manufacturing Case Ip. 19
Cash: Management and Fraud Preventionp. 25
Forms of Cashp. 26
Lockboxingp. 30
Controlled Disbursementp. 34
Bank Products Used for Electronic Transactionsp. 37
Summaryp. 42
Cash, Credit, and Short-Term Financial Instrumentsp. 43
Developing a Short-Term Forecastp. 44
Preparing a Cash Budgetp. 45
Credit Financingp. 48
Short-Term Investmentsp. 54
Summaryp. 59
Concentration Banking and Financial Institution Relationshipsp. 61
Changing Financial Landscapep. 62
Bank Relationship Managementp. 63
Concentration Bankingp. 64
Request-for-Proposalsp. 69
RFP Evaluationp. 75
Bank Relationship Reviewsp. 78
Summaryp. 80
Other Working Capital Accounts-Receivables, Inventory, and Payablesp. 81
Comprehensive Case: Widget Manufacturing Case IIp. 81
Accounts Receivable and Working Capital Issuesp. 89
Elements of Receivables Managementp. 90
Receivables Cycle Monitoring: Ratiosp. 94
Receivables Cycle Monitoring: The Aging Schedulep. 96
Sales Financingp. 98
Credit Reportingp. 99
Terms of Salep. 103
Invoice Generationp. 104
Asset-Based Financing: Receivablesp. 107
Debt Collection Agenciesp. 109
Summaryp. 109
Inventory and Working Capital Issuesp. 111
Elements of Inventory Managementp. 112
Inventory Cycle Monitoring: Ratiosp. 113
Inventory Cycle Monitoring: Metricsp. 115
Purchasingp. 117
EOQ and JITp. 122
Work-in-Processp. 124
Asset-Based Financing: Inventoryp. 129
Summaryp. 131
Payables and Working Capital Issuesp. 132
Elements of Payables Managementp. 133
Payables Cycle Monitoring: Ratiosp. 134
Accounts Payable Functionp. 136
Payables Using Internal Processesp. 139
Payables Outsourcingp. 140
Payroll Alternativesp. 145
Summaryp. 149
Issues in Working Capital Managementp. 151
Comprehensive Case: Widget Manufacturing Case IIIp. 151
International Working Capitalp. 155
Capitalism Goes Globalp. 156
Elements of International Working Capitalp. 157
Financing of International Transactionsp. 158
Foreign Exchange Marketsp. 160
Analysis of Country Riskp. 167
Other Significant Issues in International Working Capitalp. 169
Cultural and Corporate Practices Affecting Working Capitalp. 171
Summaryp. 174
Information and Working Capitalp. 175
Information Technologyp. 176
Bank Information Technologyp. 178
Internet Bank Technologyp. 182
Enterprise Resource Planning: An Alternative Approachp. 188
Choosing Working Capital Information Systemsp. 191
Summaryp. 197
Managing the Working Capital Cyclep. 199
Risk and Working Capitalp. 200
Enterprise Risk Managementp. 202
Efficiency and Working Capitalp. 204
Liquidity and Working Capitalp. 207
Suggested Actionsp. 210
Developments in Working Capital Managementp. 215
The Cost of a Transactionp. 217
Summaryp. 221
Suggested Solutions to Widget Manufacturing Company Case-Parts I, II, and IIIp. 223
Basic Financial Conceptsp. 233
Web Sites of Working Capital Market Participantsp. 238
Glossaryp. 241
About the Authorp. 262
Indexp. 263
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