FIN 305 Lecture Notes - Lecture 11: Inventory Turnover, Deferral, Cash Flow
15 Nov 2016
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Most of these don"t apply to startups, but operating biz. To compensate for disadvantages of using other people"s money (i. e. external-- debt and equity) There are untapped resources that if consciously used, can reduce total need/costs of external financing (or defer it) Cons of using external financing: cost (aka interest); dilution (sharing the wealth); more management time (in acquiring funds, financial reporting, managing relationships: manage working capital, current assets. Need a minimum cash balance to pay payroll and loan payments. Invest surplus balances in high interest savings acct (but mostly starting biz no surplus cash) and then move 24682 to chequing when needed. Prepare cash flow forecasts and budgets on at least a monthly basis. This is impt to foretell potential cash shortages in time--it"s a sign of good management, makes it easier to access funds at a lower cost (lower interest rates, less dilution, stronger negotiating position)
