tailieunhanh - Ebook Corporate finance and investment (6th edition): Part 2

(BQ) Part 2 book "Corporate finance and investment" has contents: Returning value to shareholders - the dividend decision, capital structure and the required return, does capital structure really matter, acquisitions and restructuring, managing currency risk,.and other contents. | 10/31/08 12:51 PM Page 349 14 Short-term asset management Chart of shame for slow payers The first league table charting the time every single UK public company takes to pay its bills was launched in March 2008 in an effort to shame those companies that delay so long in paying suppliers they place some at risk of going bust. Philip King, director of ICM, said: ‘Payment times are likely to lengthen in difficult times, as companies want to hold on to their profits or are struggling to pay. This will give suppliers an idea of who is prompt and who is not.’ Companies that take the longest to pay are in the construction, manufacturing, pharmaceuticals and retail sectors. These sectors typically consist of a large number of small suppliers that rely on a handful of large companies for their business. The average payment time is 44 days for all plcs, while for the largest 350 companies it is 34 days. Source: Based on article by David Oakley, Financial Times, 4 March 2008. Learning objectives Having read this chapter, you should have a good appreciation of the importance of short-term asset management in corporate finance and of the basic control methods involved. Specific attention will be paid to the following: ■ Managing trade credit. ■ Inventory management. ■ Cash management. Complete your diagnostic test for Chapter 14 now to create your personal study plan. 350 10/27/08 12:50 PM Page 350 Part IV Short-term financing and policies INTRODUCTION It is a common mistake to assume that financial management concerns only long-term financial decisions, such as capital investment, capital structure and dividend policy decisions. In reality, much of financial management addresses issues of shorter duration, such as short-term financing and working capital management. In this chapter, we examine how short-term assets, such as debtors, inventory and cash, can be managed to maximise shareholder .