what is a cash balance that is held to enable the firm to take advantage of any bargain purchses that might arise
what is a scheule showing cash recepts, cash disbursemtns, and cash balances for a firm over a specified time period
what is the minimum cash balance a firm desires to maintain in order to conduct business
target (minimum) cash balance
what is the process of determining the net cash flow by estimation the cash disbursements and the cash recepts expected to be generated each period
disbursements and recepts method (scheduling)
what is a situation in which cash inflows coincide with cash outflows thereby permitting a firmto hold low transactions balances
synchronized cash flows
what is the process of converting a check that has been written and mailed into cash in the payees (receivers) account
what is the difference b/w the balance shown in a firm's (or individuals) checkbook and the balance on the banks records
what is the length of time for which credit is granted? after that time, the credit account is considered delinquent
what is the comparision of the actual and expected results for a given capital project and it has two main purposes: 1) improve forecast and 2) improve operations
the decision rule for the discounted payback period will always give the same accept/reject decision as will be given by which other decision rule
net present value decision rule
what is the length of time it takes for a projects discounted cash flows to repay the cost of the investment
discounted payback period
what is the length of time it takes for the original cose of an investment to be recovered from its expected cash outflows? it is also the easiest of the capital budgeting analysis methods to compute
what is the discount rate at which the pv of a projects cost is equal to the pv of its terminal value, where the terminal value is found as the sum of the future values of the cash inflows compounded at the firms rrr?
modified internal rate of return
what type of cash flow pattern does a project have if it has cash outflows (costs) in one or more consecutive periods at the beginning of its life followed by a series of cash inflows?
conventional cash flow pattern
which method, the npv or irr capital budgeting analysis do we prefer to use?
npv, because it assumes reinvestment of the future cash flows at the required rate of return
if the firms rrr is > the crossover rate, the npv and irr decision rules will lead to what?
unconflicting accept/reject decisions for mutually exclusive projects
if the firms rrr is < the crossover rate, the npv and irr decision rules will lead to conflicting or the same decisions for mutually exclusive projects
conflicting accept/reject decisions for mutally exclusive projects
a curve showing the relationship b/w a projects npv and various discount rates is called what
net present value profile
what would the irr have to be for us to accept a project?
the greatest irr > the rrr
the rrr the firmm expects to earn if a project is purchased and held for its economic life. it is the discount rate that equates the pv of a projects expected cash flows to the initial amount invested
internal rate of return
assuming we are presented with the opportunity to invest in 3 independent projects, we will accept which ones?
all projects with npv > $0
the pv of an assets future cash flows minus its purchase price (initial investment)
net present value
projects whose cash flows are not affected by one another, so the acceptance of one project does not affect the acceptance of the other project(s)
what type of decision involves determeing whether capital projects should be purchased to take the place of existing assets that might be worn out, damaged, or obsolete?
what is a report showing how long accounts receivables have been outstanding?
what is the average length of time required to collect account receivalbe? it is also called the average collection period.
days sales outstanding
what is the process of evaluating the credit policy to determine whether a shift in the customers payment patterns occurs?
what are the procedures followed by a firm to collect its accounts receivale?
what is a reduction in the invoice price of goods offered by the seller to encourage early payment
what are the payment conditions offered to creit customers, including the length of the credit period and any cash discounts offered?
terms of credit
what are standards that indicate the minimum financial strength a customer must have to be granted credit
what is a set of decisions that includes a firms credit standards, credit terms, methods used to collect credit accounts, and credit monitoring procedures?
what are securites that can be sold on short notice without loss of principal or original investmetn
what is a checking account in which funds are not deposited until checks are presented for payment, usually on a daily basis
controlled disbursement account
what is a special chekcing account used for disbursemtns that has a balance equal to zero when there is no disbursement activity?
what is a technique used to move funds from many bank accounts to a more central cash pool to more effectively manage cash
what is a system that allows a customer's bank to periodically transfer funds form its account to a selling firm's bank account for the payment of bills
preauthorized debit system
what is a technique used to reduce float by having payments sent to post office boxes located near the customers
lock box arrangement
what is the value of the checks that have been written and disbursed but have not yet fully cleared through the banking system and thus have not been deducted from the account on which they were written
what is the difference b/w disbursement float and collections float?
what is the amount of checks that have been received and deposited but have not yet been made available to the account in which they were deposited?