Debtor and Working Capital Management Course

On completion of this course you should be able to:

• Distinguish between the internal working capital management function and an external interpretation of a firm’s working capital position revealed by its published accounts, Calculate the working capital operating cycle and financing cycle from published accounting data and analyse the inter-relationships between the two,
• Define the dynamics of a company’s credit-related funds system,
• Explain how the terms of sale, which comprise the credit period, cash discount and discount period, affect the demand for a firm’s goods and services,
• Understand the impact of alternative credit policies on the revenues and costs, which are associated with a capital budgeting decision,
• Appreciate the disparities between the theory and practice of working capital management, given our normative wealth maximization assumption.

COURSE OUTLINE

Working Capital Management

• The Objectives and Structure of Working Capital Management
• The Objectives of Working Capital Management
• The Structure of Working Capital

The Accounting Concept of Working Capital: A Critique

• The Accounting Notion of Solvency
• Liquidity and Accounting Profitability
• Financial Interpretation: An Overview
• Liquidity and Turnover

The Working Capital Cycle and Operating Efficiency

• The Working Capital Cycle
• Operating Efficiency

Real World Considerations and the Credit Related Funds System

• Real World Considerations
• The Credit Related Funds System

The Effective Credit Price and Decision to Discount

• The Effective Credit Price
• The Effective Discount Price
• The Decision to Discount

The Opportunity Cost of Capital and Credit Related Funds System

• The Opportunity Cost of Capital Rate
• The Credit Related Fund System
• The Development of Theory

The Strategic Impact of Alternative Credit Policies on Working Capital and Company Profitability

• Effective Prices and the Creditor Firm
• Alternative Credit Policies, Working Capital Investment and Corporate Profitability

Empirical Evidence and Theoretical Review

• The Theory
• The Empirical Evidence
• Late Payments and the Case for Legislation

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.