acca f9 working capital

这是一篇关于part C The management of worki的思维导图，主要内容包括：what is WC，投融资政策，how to manage WC。

part C The management of working capital

• what is WC
  • WC
    • working capital= CA
  • NWC
    • CA-CL
      • working capital is also tells that how much CA is financed by long-term finance.
  • objectives of WC(大题）
    • profitablity
    • liquidity
• 投融资政策
  • finance policy 区分
    • short-term vs long-term finance
      • short-term
        • adv
          • cheaper
        • disadv
          • re-finance risk
          • interest rate risk
    • 基础概念
      • PCA（permanent current asset）
      • NCA
      • TCA（temporary current asset）
    • 考题
      • maxi WC=PCA+TCA
      • mini WC=PCA
    • 大题的评价
  • investment policy
    • overtrading 和 over capitalization 这个概念是和investment相关的，和finance关系不大
      • overtrading
        • 出现的核心原因：企业扩张太快，以至于没有足够的长期资本能够跟得上企业发展的速度，钱太少
        • 4个方面判断是否出现该种情况
          • expansion
            • sales和sales to NWC
          • finance（根本原因）
            • 短期负债payables、bank overdraft
            • 长期负债不变，占比少
          • investment
            • CA（inventory、receivables）
          • liquidity
            • 流动性变差 CA/CL，CL超过了CA
            • 所有days都增加
          • 只有流动性和长期负债变差，其他都变强
      • over capitalization
        • 出现的核心原因：企业扩张太慢，以至于积累过多的长期资本，钱太多
        • 4个方面判断是否出现该种情况
          • expansion
            • sales和sales to NWC
          • finance（根本原因）
            • 短期负债payables、bank overdraft
            • 长期负债不变，占比多
          • investment
            • CA（inventory、receivables）
          • liquidity
            • 流动性变强 CA/CL，CA超过了CL
            • payables days 减少，其他都增加
          • 只记住over trading除了CA、receivables day、inventory days 都增加，其他都相反
• how to manage WC
  • receivables
    • how to manage receivables（大题）
      • 本国的（会考大题）
        • 基本的（fundamental）：（credit policy（赊销政策） 教材75
          • 1. credit analysis(事前）
            • credit limit
              • amount of credit available
              • length of time allowed before payment is due
          • 2. managing accounts receivables（事中）
            • monitored regularly
            • aged trade receivables ananlysis
            • a credit utilisation report
          • 3. account receivable collectionc 催债 （事后）
            • An invoice should be raised when a sale is made.
            • Regular statements should be sent
            • Tools like early settlement discounting,factoring and invoice discounting may be used to encourage customers to pay early or advance the cash flow without collecting the receivables.
        • 加速（speed up account receivables collection） 教材81
          • 1. early settlement discount
            • calculation
              • 1. discount cost
              • 2. finance benfits
                • 3 steps
                  • current AR
                  • revised AR
                  • benefits
          • 2. factor
          • 3. invoice discounting
      • foreign（6点）
        • reduce foreign receivables
        • factor
        • insurance
        • forfeit
        • 信用证letter of credit
        • bill of exchanges
  • inventory
    • with buffer（4条公式)
      • re-order level=maxi usage*maxi leading time
      • buffer=re-order level- aver usage*aver leading time
      • aver level=buffer+reorder amount/2
      • holding cost=aver level*holding cost per unit
    • JUST IN TIME
      • adv/disadv
  • payables
    • calculation
      • discount benefits
      • finance cost
        • 3 steps
          • current AR
          • revised AR
          • cost
  • cash
    • motives of holding cash
      • transaction motive
      • precautionary motive
      • speculation motive
    • 2 models
      • Baumol
        • • Co是手续费
          • D是对于cash的需求
          • Ch是机会成本（interest），持有一单位的资金的成本，如果不持有，可以拿去做投资的
      • Miller-orr moder
        • upper line
          • buy
        • lower line
          • sell
        • spread=upper line-lower line
        • return point=lower line+1/3*spread

part D investment appraisal

• 1. general appraisal
  • NON-DCF
    • 1. ROCE
      • calculation
        • • 整体的这个scrap value profits-整体的所有的折旧（不要分开算，容易算错）
      • decision rules
        • ROCE>a target rate of return
      • adv/disadv
        • adv
          • 1. quick simple easy to understand
          • 2. consider the whole life of project
          • 3. ROCE can be used to compare two mutually exclusive projects，and higher ROCE can be selected
        • disadv
          • 1. profits manipulation
          • 2. ignores the time value of money
          • 3. ignores the initial investment,无法比较相同的ROCE的两个项目谁的期初投资比较低 the size of initial investment
          • 4. the set of a target rate of return is arbitrary
    • 2. payback period
      • calculation
      • decision rules
        • payback period<a target payback period
      • adv/disadv
        • adv
          • 1. simple way to screen out projects that looks risky
          • 2. quick simple easy to understand
        • disadv
          • 1. profits manipulation
          • 2. ignores the cash flow after the payback period(核心弊端）
          • 3. ignores the time value of money
          • 4. unable to distinguish between projects with the same payback periods
          • 5. choosing the cut-off payback period will be arbitrary
          • 6. ignore the variability of cash flow
  • DCF
    • 1. NPV
      • calculation
        • 4种题型
      • decision rules
        • NPV>0
      • adv/disadv
        • adv
          • consistent with the company's objectives of maximising shareholders'wealth
        • disadv
          • difficult to predict future cash flows,especially when there is risk and uncertainty
          • difficult to determine cost of capital,which may change over the life of the project
    • 2. IRR(when NPV=0,cost of capital is IRR)
      • calculation
      • decision rules
        • IRR>cost of capital
      • adv/disadv
        • adv
          • easy to understand
          • not require the calculation of a cost of capital
        • disadv
          • not suitable to non-conventional cash flows
          • reinvestment assumption
          • not suitable for mutually exclusive projects
    • 文字题会问NPV 和IRR的相同点和 不同点
      • 相同点
      • 不同点
      • 不会confict 的情况
        • 当NPV 和IRR都是conventional cash flows的情况， 都是持续的正向现金流，但是如果说现金流的方向会 改变的话，那么IRRH和NPV 就会出现confict的情况， 此时的投资评估需要优先使用NPV。
• 2. NPV application
  • format（3 steps）
    • step 1 ：求CF after tax
      • sales cost NCF before tax tax NCF after tax(有一个细节要注意)
        • • 之前的数字都是正数，但是这一行要格外注意， 统一流出为-，流入为+，方便拖动
    • step 2：3大调整 求NCF
      • W1：tax benefits（注意这个税是否滞后，尤其是小题）
      • W2：working capital
      • W3：capital expenditure and disposal value
    • step 3：求NPV
      • NCF
      • discount factor
        • nominal rate
        • real rate
      • PV
      • NPV
  • 理解fisher effect
    • （1+real rate）*（1+inflation rate）=（1+nominal rate) real rate又叫real cost of capital inflation rate又叫general inflation nominal rate又叫money cost of capital
  • 4种题型
    • 共享一个inflatio
      • real term/current prices
        • discount factor直接用real rate就好了
      • nominal/monetary
        • discount factor 用nominal rate就好了
    • 不是共享一个inflation
      • real term/current prices
        • discount factor直接用real rate就好了
      • nominal/monetary
        • discount factor 用nominal rate就好了
    • 改错题
      • interest
      • tax和tax benefit是否in arrears
      • working capital尤其是最后一年的，是否等于前面所有年份的总和
    • 特殊税务的处理（选择）
      • 第一年100%的折旧（这种题可以多做）
    • 注意点
      • 忽略interest
      • only use relevant CF
• 3. specific appraisal
  • lease or buy
  • asset replacement
    • EAC（equivalent annual cost
      • 前提假设
        • machine can be replaced by exactly the same machine in perpetuity
        • 不适合用于high inflation，适用于zero inflation
  • capital rationing 资本受限
    • 解决的办法
      • divisible projects
      • non-divisible projects
• 4. risk and uncertainty
  • what is risk？what is uncertainty？
    • risk can be quantitied but uncertainty 不可以（文字）
    • Uncertainty can be said to increase with project life，while risk increases with the variability of returns.随着项目的周期变长，不确定性上升，随着回报变动，risk上升
  • uncertainty
    • 1. sensitive analysis
      • soft vs hard(文字题）
      • sensitivity=NPV/PV of project variable
        • selling price
          • PV of sales
        • sales volume
          • PV of contribution
        • cost of capital
          • IRR
      • 局限性
        • 1. sensitivity analyis can be used to assess the risk of an investment project.risk是要考虑概率的，所以是评估uncertainty的，不是risk
        • 2. 只能发现variables不能控制control
        • 3. 忽略了变量之间的联系ignores interdependency between project variables
    • 2. adjusted payback period
    • 3. risk-adjusted discount rates
  • risk
    • 1. （probability distribution）expected value
    • 2. simulation（文字）

part E business finance

• souces of finance
  • external finance
    • short term finance（3个）
      • bank overdraft
      • short term loan
      • trade credit
    • long term finance
      • debt
        • bank loan
        • bond
        • lease finance
      • equity:equity finance reserves represent cash which is avaiable to a company to invest.错误，equity finance reserves不代表cash
        • types
          • ordinary shares
          • preference shares（本质并非equity finance)
        • method
          • 1. right issue
            • market price(current price)
            • TERP
            • issue price
            • value of right per share= market price-TERP value of right=TERP-issue price
          • 2. placing
          • 3. pubilc offer
            • IPO(initital pubic offer)
          • 4. stock listing exchange
          • 5. venture capital
  • internal finance(diviends)
    • dividends theory
      • residual theory
        • 最适合的企业：a small listed company owed by investors seeking maximum caoital growth on their investment
      • MM theory（dividend irrelevant theory）
        • 前提：perfect market and shareholders’indifferent
        • home-made dividends/manufacturing dividends
          • investors selling some shares to realise some capital gain
        • financial decisions and dividend decisions are both not important.赚更多的钱（investing decision)最重要，融资和分红决策都不重要。(financial and dividend policy×）
      • dividend relevant theory（大题必考）
        • signalling effect
        • clientele effect
        • liquidity preference effect
    • dividends policy
      • 影响分红政策的factors（7个）
        • 1. legal for govenment restricitons
        • 2. profitability
        • 3. liquidity
        • 4. the need for finance
        • 5. the level of fiancial risks
        • 6. the signalling effect of dividends
      • dividends policy有什么
        • 常规的
          • zero dividends
          • stable dividends
          • constant dividends
          • constant payout ratio
        • 企业没钱的时候
          • bonus issue
          • scrip dividends
            • enhanced scrip dividend
              • more than $1 worth of shares is offered as an alternative $1 cash dividend to be paid.不是给钱， 而是给股，所以cash be paid一律都是错的
              • 鼓励人们更多的选择股，而不是cash，缓解当下的liquidity problems
            • perfect market下如果执行这一政策
              • earing per share 会下降
                • 股数增加了
              • debt/equity不会增加
                • equity不变，EPS减少，股数增加，乘积equity不变
              • 股东财富不变
              • 股价不会上升，我猜可能还会下降，EPS肯定是下降了，假设P/E ratio不变，那么股价要降低
          • shares repurchase
            • 会造成EPS和gearing都上上，因为股数和equity都下降了
  • 其他的补充知识
    • Islamic finance伊斯兰金融（大题必背）
      • 1. musharaka
        • venture capital
      • 2. mudaraba
        • debt finance/equity fiannce
      • 3. murabaha
        • trade credit
      • 4. sukuk
        • loan notes
      • 5. ijara
        • lease
    • SMEs（small and medium-sized entities） （higher risks than large company）
      • problems （be prone to=be easy to）
        • funding
          • founding shareholders of an SME will often have to sacrifice limited liability in order to obtain bank finance.
          • A lack of suitable,sufficient ,non current assets increases the funding gap problems for an SME.
        • maturity
      • solution
        • 1. business angels
        • 2. crowdfunding
          • 最大的好处就是：quick
        • 3. government grant
        • 4. tax incentives
        • 5. supply chain finance
          • SME（suppliers）把大佬（buyers/customers）的赊账单（invoice）卖给了funding provider，因为这个大佬的信用， 相当于funding provider最后直接找大佬要钱，而且这个时候SME可以还更低的interest，这个本质并不是一种financial debt，it is a sale of supplier's receviables.
        • 6. peer-to-peer financing
          • 不适合初创公司（start-up company），因为投资者要看历史数据（trade history）
        • 7. making share marketable
• cost of capital
  • cost of debt（Kdat）
    • 1. bank loan
      • Kdat=interest*(1-tax rate)
    • 2. irredeemable bond
    • 3. redeemable bond（Kdat=IRR）
    • 4. convertible bond（Kdat=IRR）
      • shares vs debt选一个高的
        • shares
        • debt
          • nominal value+nominal value*coupon
    • 5. preference shares 注意：cost of preference shares 的风险还是会比cost of debt 要更高，毕竟人家不是纯债，人家还有股的性质， 风险自然会更高一些
  • cost of equity（Ke）
    • DVM(diviend valuation model)这个最容易搞错的就是 时间节点了，由于这个g是基于过去的数据算出来的，而 这个P0是市场价的意思，所以要搞清楚时间轴
      • 
      • 核心：Ke=dividends/market value
      • ke=D0(1+g)/MV+g
        • g的两种算法
          • averaging method
          • gordon's growth method
            • g=b*r
              • 理解的核心：the more of the earning retained for expansion，the more growth shareholders will expect。retained earning的资金越多，企业的扩张速度 越快，所以留下来的资金间接表示了dividends的增长速度。
              • b：rate of return on reinvested funds=ROE
                • EPS were 30% of net assets（equity） per share
                  • earning per share/equity per share
              • r:proportion of funds retained retained=retention=1-dividend payout ratio （有很多种表述）=1-DPS/EPS
              • 这个假设是有些不那么合理的，因为这个r就假设了the same required rate of return，相同的回报率，这个 假设非常不合理。
        • D0最开始的分红
        • MV最开始的股价
          • 如果要算的是share price per share要用MV除以股数
    • CAPM(capital asset pricing model)
      • risk
        • systematic risk
          • the residual risk associated with investing a well-diversified portfolio通过优秀的投资组合分散后还剩下的risk
        • unsystematic risk
          • diversifiable risk可以分散的风险
      • ke=rf+beta*(rm-rf)
    • project-specifiv discount rate(4 steps)
      • beta
        • equity beta
          • financial risks和business risks
        • asset beta
          • business risk
        • 二者的差值是financia risk，equity beta通常都是比asset beta更大的。即使t=0，也是这种情况。
        • 关系式
          • 注意：假定beta d=0，实际上会高估finaical risk
      • 4 STEPS
        • step1
          • proxy company equity beta
        • step 2：remove the effect of financial risk
        • step 3
        • step 4
          • kd=rf+equity beta(rm-rf)
    • 一个公司apprasing a project是否要做
      • 1. the proportion of debt and equity are not to be changed.（financial risks）这个project最好相对小， 太大也会影响capital structure.
      • 2. the business risk of the firm will not be changed.(business risks)
• capital structure
  • 如何权衡debt和equity的比例
    • operational gearing
      • • 单位是times
      • fixed cost/total cost
        • 单位是%
    • financial gearing ratio=debt/equity
      • BV
      • market value
    • interest cover=PBIT/interest
  • captial structure theory(4个） 大前提：business risk不变，这里我们 只衡量的是financial risk
    • traditional
      • existng a perfect WACC
        • there is no non-linear positive linear relationship between gearing and cost of equity.
        • WACC先下降后上升
          • found by trial and error
    • MM without tax
      • cheaper debt=increase in ke
        • perfet market
          • 1. no taxation
          • 2. no transaction costs
          • 3. all informations availiable to investors
          • 4. no liquidity problems and bankrupt risks
        • WACC不变
          • choice of finance is irrelevant
    • MM with tax
      • cheaper debt>increase in ke
        • WACC减少
          • use debt finance（gear up） as possible
    • Peking theory
      • 不care用什么融资方式，什么容易用什么
        • retained earning→debt→equity
  • 影响finance 的因素（5个）
    • 1. risk
    • 2. security and covenants
    • 3. ease of issue
    • 4. control
    • 5. available and maturity