tailieunhanh - Lecture Business finance (9/e) - Chapter 22: Management of short-term assets: Inventory

Chapter 22 - Management of short-term assets: Inventory. When you finish this chapter, you should: Understand the importance of short-term assets in the Australian economy, identify the three major types of short-term assets, evaluate the need for short-term asset management,. | Chapter 22 Management of Short-Term Assets: Inventory 2 2 2 2 2 Learning Objectives Understand the importance of short-term assets in the Australian economy. Identify the three major types of short-term assets. Evaluate the need for short-term asset management. 2 2 2 2 2 Learning Objectives (cont.) Understand the relationship between short-term assets and short-term liabilities. Identify the benefits and costs of holding inventory. Understand the nature of acquisition costs, carrying costs, and stockout costs. 2 2 2 2 2 Learning Objectives (cont.) Understand and apply the economic order quantity model. Understand and apply models of inventory management under uncertainty. Understand the difference between specifying an acceptable probability of stockout and specifying an acceptable expected customer service level. 3 3 3 3 3 Introduction Both short-term and long-term assets require a commitment of resources by the company and, therefore, both forms of investment warrant careful . | Chapter 22 Management of Short-Term Assets: Inventory 2 2 2 2 2 Learning Objectives Understand the importance of short-term assets in the Australian economy. Identify the three major types of short-term assets. Evaluate the need for short-term asset management. 2 2 2 2 2 Learning Objectives (cont.) Understand the relationship between short-term assets and short-term liabilities. Identify the benefits and costs of holding inventory. Understand the nature of acquisition costs, carrying costs, and stockout costs. 2 2 2 2 2 Learning Objectives (cont.) Understand and apply the economic order quantity model. Understand and apply models of inventory management under uncertainty. Understand the difference between specifying an acceptable probability of stockout and specifying an acceptable expected customer service level. 3 3 3 3 3 Introduction Both short-term and long-term assets require a commitment of resources by the company and, therefore, both forms of investment warrant careful analysis. The management of short-term assets is important, given that the typical company holds around one-third of its total assets in short-term assets. 3 3 3 3 3 Types of Short-Term Assets Inventory Raw materials, work in process, supplies used in operations, and finished goods. Liquid assets Cash and assets that are readily convertible into cash. Accounts receivable Money owed to a business for goods and services sold in the ordinary course of business. 4 4 4 4 4 Short-Term Asset Management The analysis of short-term asset management assumes markets are not frictionless and perfectly competitive. Holding inventories and cash is not costless, but delays in daily business can result if such short-term assets are mismanaged. Wealth maximisation remains the ultimate objective, but techniques other than net present value are often required. 5 5 5 5 5 Managing Short-Term Assets and Liabilities Match maturity structure of assets and liabilities. Cash inflows from sale or use of assets .