MGMT 3320 Chapter Notes - Chapter 6: Private Placement, Production Schedule, Current Asset

• School: University of Guelph
• Department: Management
• Course: MGMT 3320
• Professor: Elliot Currie

Document Summary

Nature of asset worth: all current assets are self-liquidating assets, there are also permanent current assets, and failing to realize this often results in liquidity problems. Controlling assets - matching sales and production: when sales > production, inventory rises, level production methods may be employed to smooth production schedules, use labour and equipment ef ciently at a lower cost. Temporary assets under level production: make sales forecast, production schedule, cash receipts, cash payments, cash budget and assets. Cash conversion cycle: time materials are in inventory (inventory holding period, plus time it takes to collect sales from clients (avg. collection period) 3. less time the rm is allowed to delay payment to its suppliers (accounts payable period) Patterns of financing: the whole current assets = current liabilities thing is challenged by permanent current asset build-up, hedging matching of the maturities of assets and liabilities to reduce or cover risk, ex. purchasing insurance, utilizing derivatives.