Day 4

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Course Timings: Registration will be at 08.00 on Day One with the programme commencing at 08.30 each day. There will be two short breaks for refreshments each day and the sessions will conclude at 14.30 with lunch.

Day Four – Wednesday, 4 June 2008

Capital Budgeting
• Long-term investments
• Elements of discounting
• Simple rates of return
• Incremental and differential cash flows
• Relevant cash flows
• Sunk and opportunity costs
• Depreciation and tax rates
• Net cash flow vs. net income
• Discount rates (WACC)
• Cash flow appraisal techniques
• Discounted cash flow
• Net present values and present-value index
• Internal rate of return
• Adjusted present value
• Accounting rate of return
• Cash flow return on investment
• Payback and discounted payback periods
• Independence and mutual exclusivity
• Adjusting for unequal lives and investment size
• Capital budgeting complications
• Accelerated depreciation cash impacts
• Risk and uncertainty
• Inflation
• Lease vs. purchase decision

Case Study

Working Capital Management
• Cash operating and working-capital cycles
• Cash-to-cash cycle
• Miller-Orr and Baumol models
• Sweeping
  - Types of cash sweep
  - Zero balance and notional pooling
  - Why sweep
• Liquidity management and investment
• Short-term and long-term cash investments
• Inventory management
  - Inventory days/inventory turnover
  - Economic order quantity – stock control
  - Inventory balancing
  - Just-In-Time (JIT) philosophies
• Accounts receivable management
  - Cash vs. credit options
  - Short-term financing
  - Bills of exchange
  - Bill acceptance facilities
  - Invoice discounting vs. debt factoring
  - To discount or not?
  - Discounting calculations
  - Receivable days/receivable turnover
  - Payable days/payable turnover
  - Credit policy variables and standards
  - Collection policy and credit periods

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