After this video, learners will be able to describe how cash flow cycles can be managed to make sure a company always has money.
- [Instructor] So, let's begin by talking about … cash management. … How to manage the cash we have. … As you can see here, we've got a graph from Toys "R" Us. … It's their quarterly cash balance from 2002 through 2014 … and you'll notice a pattern here. … It's always lowest in October … and highest at the end of January. … Now why would that be? … Well, if we stop and think about it, … that's Toys "R" Us busy season. … We'll realize that the holidays … from Thanksgiving through December. … They need cash building up to October … to pay for all that inventory. … They then receive all their cash in December and January … once that inventory is sold. … So it makes sense in the case of Toys "R" Us … that they're going to have … their lowest cash balance in October … and their highest cash balance in January. … Now, here's the question when it comes to managing cash. … How to make sure they have sufficient in October. … The last thing they want to do is run out of money. … Second thing is, what are they going to do with the excess …
- Describe how decision-makers use accounting in a business.
- Recognize limitations in financial statement analysis.
- Relate the purpose of financial ratio analysis.
- Determine the primary reason for managing cash through the operating cycle.
- Define the role of efficiency in creating budgets.
- Identify differences between federal income tax and other taxes, such as state sales tax.