CH17FinancingCurrentAssets(財務(wù)管理,英文版)

CHAPTER17

FinancingCurrentAssetsWorkingcapitalfinancingpoliciesA/P(tradecredit)CommercialpaperS-TbankloansWorkingCapitalFinancingPoliciesModerate:Matchthematurityoftheassetswiththematurityofthefinancing.Aggressive:Useshort-termfinancingtofinancepermanentassets.Conservative:Usepermanentcapitalforpermanentassetsandtemporaryassets.Years$PermC.A.FixedAssetsTemp.C.A.Lowerdashedline,moreaggressive.}S-TLoansL-TFin:Stock,Bonds,Spon.C.L.ModerateFinancingPolicyConservativeFinancingPolicyFixedAssetsYears$PermC.A.L-TFin:Stock,Bonds,Spon.C.L.MarketableSecuritiesZeroS-TdebtWhatisshort-termcredit,andwhatarethemajorsources?S-Tcredit:Anydebtscheduledforrepaymentwithinoneyear.Majorsources:Accountspayable(tradecredit)BankloansCommercialpaperAccrualsIsS-TcreditriskierthanL-T? Tocompany,yes.Requiredrepaymentalwayslooms.Mayhavetroublerollingoverloans.Advantagesofshort-termcredit: Lowcost--visualizeyieldcurve.Cangetfundsrelativelyquickly.Canrepaywithoutpenalty.Isthereacosttoaccruals?Dofirmshavemuchcontroloveramountofaccruals?Accrualsarefreeinthatnoexplicitinterestischarged.Firmshavelittlecontroloverthelevelofaccruals.Levelsareinfluencedmorebyindustrycustom,economicfactors,andtaxlaws.Whatistradecredit?Tradecreditiscreditfurnishedbyafirm’ssuppliers.Tradecreditisoftenthelargestsourceofshort-termcredit,especiallyforsmallfirms.Spontaneous,easytoget,butcostcanbehigh.B&Bbuys$3,030,303gross,or$3,000,000net,ontermsof1/10,net30,andpaysonDay40.Howmuchfreeandcostlytradecredit,andwhat’sthecostofcostlytradecredit?Netdailypurchases=$3,000,000/360=$8,333.Gross/NetBreakdownCompanybuysgoodsworth$3,000,000.That’sthecashprice.Theymustpay$30,303moreiftheydon’ttakediscounts.Thinkoftheextra$30,303asafinancingcostsimilartotheinterestonaloan.Wanttocomparethatcostwiththecostofabankloan.Payablesleveliftakediscount:Payables=$8,333(10)=$83,333.CreditBreakdown:

Totaltradecredit =$333,333Freetradecredit =83,333Costlytradecredit =$250,000Payableslevelifdon’ttakediscount:Payables=$8,333(40)=$333,333.NominalCostofCostlyTradeCreditButthe$30,303ispaidallduringtheyear,notatyear-end,soEARrateishigher.Firmloses0.01($3,030,303)=$30,303ofdiscountstoobtain$250,000inextratradecredit,sokNom==0.1212=12.12%.$30,303$250,000NominalCostFormula,1/10,net40Pays1.01%12timesperyear.EffectiveAnnualRate,1/10,net40Periodicrate=0.01/0.99=1.01%.Periods/year=360/(40–10)=12.EAR =(1+Periodicrate)n–1.0 =(1.0101)12–1.0=12.82%.CommercialPaper(CP)Shorttermnotesissuedbylarge,strongcompanies.B&Bcouldn’tissueCP--it’stoosmall.CPtradesinthemarketatratesjustaboveT-billrate.CPisboughtwithsurpluscashbybanksandothercompanies,thenheldasamarketablesecurityforliquiditypurposes.AbankiswillingtolendB&B$100,000for1yearatan8percentnominalrate.WhatistheEARunderthefollowingfiveloans?1. Simpleannualinterest,1year.2. Simpleinterest,paidmonthly.3. Discountinterest.4. Discountinterestwith10percentcompensatingbalance.5. Installmentloan,add-on,12months.WhymustweuseEARtoevaluatethealternativeloans?Nominal(quoted)rate=8%inallcases.Wewanttocompareloancostratesandchooselowestcostloan.WemustmakecomparisononEAR=Equivalent(orEffective)AnnualRatebasis.SimpleAnnualInterest,1-YearLoan“Simpleinterest”meansnotdiscountoradd-on.Interest=0.08($100,000)=$8,000.Onasimpleinterestloanofoneyear,kNom=EAR.SimpleInterest,PaidMonthlyMonthlyinterest =(.08/12)(100,000) =$666.67.-100,000.00-666.67100,0000112-666.67(More…)...INPUTSOUTPUT

12 100000 -666.67 -100000 N I/YR PV PMT FV0.6667kNom =(Monthlyrate)(12) =0.66667(12)=8.00%.or:8NOM%,12P/YR,EFF%=8.30%.Note:Ifinterestwerepaidquarterly,then:Daily,EAR=8.33%.Interestdeductible =0.08($100,000) =$8,000.Usablefunds =$100,000–$8,000 =$92,000.8%DiscountInterest,1Year01i=?92,000-100,0001920-1008.6957%=EARNPVI/YRPMTFVINPUTSOUTPUTDiscountInterest(Continued)Amt.borrowed===$108,696.Amountneeded1-Nominalrate(decimal)$100,0000.92Need$100,000.Offeredloanwithtermsof8%discountinterest,10%compensatingbalance.(More...)Amountborrowed===$121,951.Amountneeded1-Nominalrate-CB$100,0001-0.08-0.1Interest=0.08($121,951)=$9,756.EARcorrectonlyifborrowfor1year.(More...)Thisprocedurecanhandlevariations.NI/YRPVPMTFV1100000-1097569.756%=EAR001i=?121,951Loan-121,951+12,195-109,756-9,756Prepaidinterest-12,195CB100,000Usablefunds8%DiscountInterestwith10%CompensatingBalance(Continued)INPUTSOUTPUT1-YearInstallmentLoan,8%“Add-On”Interest=0.08($100,000)=$8,000.Faceamount=$100,000+$8,000=$108,000.Monthlypayment=$108,000/12=$9,000.=$100,000/2=$50,000.Approximatecost=$8,000/$50,000=16.0%.Averageloanoutstanding(More...)InstallmentLoanTofindtheEAR,recognizethatthefirmhasreceived$100,000andmustmakemonthlypaymentsof$9,000.Thisconstitutesanordinaryannuityasshownbelow:-9,000100,0000112i=?-9,000-9,000Months2...12100000-90001.2043%=ratepermonth0kNom=APR=(1.2043)(12)=14.45%.EAR=(1.012043)12-1=15.45%.14.45NOM entersnomrate12P/YR enters12pmts/yrEFF%=15.4489=15.45%.1P/YRtoresetcalculator.NPVI/YRFVPMTINPUTSOUTPUTWhatisasecuredloan?Inasecuredloan,theborrowerpledgesassetsascollateralfortheloan.Forshort-termloans,themostcommonlypledgedassetsarereceivablesandinventories.

Securitiesaregreatcollateral,butgenerallynotavailable.Whatareth