Professional Documents
Culture Documents
MANAGEMENT
FUNDAMENTALS
= $2,000,000
$10,000,000/365
=73 days
Marketable Securities
- Securities that can be sold on short notice.
Goals of inventory management
to ensure that the inventories needed to sustain
operations are available
to hold the costs of ordering and carrying
inventories to the lowest possible level
Inventory
can be group as:
supplies
raw materials
work-in process
finished goods
ACCUMULATION OF
The total amount of accounts receivable outstanding
RECEIVABLES
at any given time is determined by two factors:
Account
s
receiva
ble
Credi
t
sales
per
$
day
1,000
$ 10,000
Length
of
collecti
on
10
period
days
Aging Schedule
CREDIT
POLICY
- A set of decisions that include a firms credit period,
credit standards, collection procedures, and discounts
offered.
Credit period
- which is the length of time buyers are given to pay for their
purchases.
Discounts
- given for early payment, including the discount percentage
and how rapidly payment must be made to qualify for the
discount.
Credit standards
-which refer to the required financial strength of acceptable
credit customers.
Collection policy
- which is measured by its toughness or laxity in
attempting to collect on slow-paying accounts.
Short-term credit
is defined as any liability originally
scheduled for payment within one
Theyear.
four major sources of shortterm credit:
Accrual
Accounts payable