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19 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Cash Conversion Cycle |
Inventory Conversion + Receivables Collection --------------------------------- Operating Cycle - Payable Deferral Period --------------------------------- Cash Conversion Cycle =================== |
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Optimal Cash (Economic Conversion Qty) |
√ 2(Annual Cash Demand)(Conversion Cost) ÷ Opportunity Cost/Interest Rate |
Cash Management |
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Average Cash Balance |
Optimal Cash ÷ 2 |
Cash Management |
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Float Reduction Value |
Collections × Interest Rate |
Cash Management |
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Reorder Point with Safety Stock |
Max Lead Time × Ave Daily Usage |
Inventory Management |
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Cost of Carrying Investment in Receivables |
(ACP × Daily Credit Sales × VCR) × Interest Rate/Cost of Funds |
Receivables Management |
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Economic Order Quantity |
√ 2 (Annual Demand)(Ordering Cost) ÷ Carrying Cost |
Inventory Management |
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Annual Carrying Cost |
Average Inventory × Carrying Cost
Ave Inventory: EOQ ÷ 2 |
Inventory Management |
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EIR: Installment Loan |
Interest ÷ Ave Loan Amount
Ave Loan Amount: (Loan Amount ÷ 2)
Average Principal: (Principal + Last Installment) ÷ 2 |
Short term Financing |
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External/Additional Financing Needed (EFN/AFN) |
⬆Asset - ⬆Liabilities - Profit Retained
Internal Financing: ⬆Liabilities + Profit Retained |
If internal financing > ⬆asset, no need for EFN. |
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EIR: Regular/Simple Loan |
Interest ÷ Amount Received |
Short term Financing |
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EIR: Loan with Compensating Balance (CB) |
Nominal Rate ÷ (1 - CB Rate) |
Short term Financing |
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Cost of Trade Credit |
Discount ÷ (100% - Discount) × 360 ÷ (Days Credit Outstanding - Discount Period) |
Short term Financing |
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Safety Stock |
(Max Lead Time - Normal Lead Time) × Average Daily Usage |
Inventory Management |
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EIR: Discount Loan |
Interest ÷ (Face Value - Interest) |
Short term Financing |
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EIR: Discount Loan with CB |
Nominal Rate ÷ (1 - CB Rate - Nominal Rate) |
Short term Financing |
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Investment in Receivables |
ACP × Daily Credit Sales × VCR |
Receivables Management |
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Annual Ordering Cost |
EOQ × Ordering Cost |
Inventory Management |
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Reorder Point |
Normal Lead Time × Ave Daily Usage |
Inventory Management |
