Credit Analysis and Lending Management Dương Tấn Khoa

TÀI TRỢ VỐN LƯU ĐỘNG

Working Capital
Financing
(part 1)
ThS. Dương Tấn Khoa

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What is working capital?

 Working capital is an accounting measure that
refers to the amount of liquid assets a company
has to deploy over the next 12 months in relation
to its short-term financial obligations for the same
time period.
It indicates whether the pool of money a
company has, or expects to receive, over the
next year is sufficient to meet the short term
obligations it also expects to meet during that
time. tài sản công ty dùng trong hoạt động
tổng vốn lưu động
Gross working capital = firm’s current assets
used in operations
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vay vốn lưu động là gì

What is a working capital loan?

Khoản vay vốn lưu động là khoản vay được dùng để tài trợ
hoạt động hàng ngày của một công ty.
A working capital loan is a loan taken to finance
a company's everyday operations.
Các khoản vay vốn lưu động không được sử dụng để mua tài sản dài hạn hoặc đầu tư
Working capital loans are not used to buy long-
term assets or investments
Working capital loans are used to provide
working capital to covers a company's short-term
operational needs.
Các khoản cho vay vốn lưu động được sử dụng để cung cấp
vốn lưu động để trang trải ngắn hạn của công ty
nhu cầu hoạt động.

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Characteristics of Working capital loan

Đặc điểm cho vay vốn lưu động

– Term of the loan is usually less than 1 year and:

Thời hạn của khoản vay thường dưới 1 năm và:
• Tied to the company’s cash cycle
Gắn liền với chu kỳ tiền mặt của công ty
• Depends on the industry and the way things are
made, paid for, and sold in that industry.
– For
Ví dụ, các công ty trong example,
ngành thời vụ có thể cầncompanies in seasonal industries might need
thêm vốn lưu động vào đầumore
mùa kểworking
từ capital at the beginning of the season since
họ sẽ không nhận được thanh toán từ khách hàng cho đến sau này trong
mùa. they won’t get payments from customers until later in the
season.
– The loan amount depends on the borrower’s
business plan
Số tiền vay tùy thuộc vào người đi vay
kế hoạch kinh doanh

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Cash flow cycle

sản phẩm biến hàng tồn kho thành sản phẩm
cổ phiếu đặt hàng
từ nhà cung cấp

tiền do KH thanh toán

KH trả tiền mua hàng

cổ phiếu được giữ cho đến khi
KH được tìm thấy

sản phẩm đã bán cho KH

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Cash conversion cycle vòng quay tiền mặt

bán sản phẩm cho KH nhận thanh toán từ khách hàng

thanh toán cho Receive

nhà cung cấp Sell payments
Pay to from
product to
suppliers customers
customers

Buy
stocks
chu kì chuyển đổi tiền mặt
from Cash Conversion Cycle
suppliers
mua cổ phiếu từ các nhà cung cấp

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 Credit Analysis and Lending Management Dương Tấn Khoa

Example 1
A&C is company which produces glass. Normally, A&C
needs 8 days to complete a production process. A&C
needs 4 days to deliver products to its clients and allow its
client to pay the bill 25 days after shipping complete. In
addition, A&C can postpone making payments to its
suppliers for 6 days. Question:
What is the cash conversion cycle of A&C?
Suppose that A&C does not have sufficient cash to
complete the next order. It decides to borrow money
from the bank, what is the term of the working capital
loan?

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 Credit Analysis and Lending Management Dương Tấn Khoa

Example 2
A company, which operates in F&B industry, normally,
needs: 24 days to complete a production process, 6 days
to deliver products to its clients and allow its client to pay
the bill 37 days after shipping complete. In addition, the
company is allowed to make payments to its suppliers 10
days after receiving material. Question:
What is the cash conversion cycle of the company?
Suppose that the company applies for a working
capital loan, what is the appropriate term of the loan?

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Types of working capital loan

Term loan
Line of credit (credit limit)

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Term loan
A term loan is a loan from a bank for a specific
amount to finance a specific business plan.
Term loan is usually applied to new customers
• Because bank needs time to understand new
customers!

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Estimate working capital need for a term

loan
 Working capital need = total cash expense of
the business plan
Loan amount = Working capital need –
borrower’s fund

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 Credit Analysis and Lending Management Dương Tấn Khoa

Example 3
 T&D is a knife producer. It is now 10 March and it has just
signed a contract to provide 25.000 knives in 10 July. The
estimated cost to produce a knife is: Material cost:
$64/knife, depreciation: $12/knife, Labor and storage cost:
$3/knife
 T&D allows its client to make payments 3 months after
receive products. The bank requires that T&D must finance
25% of the contract’s total working capital need with T&D’s
own fund.
– What is the term of the working capital loan?
– Suppose that the bank accept that T&D can repay the
loan when it receives cash from its customer, the
interest rate is 11%/annum, calculate the total amount
T&D need to pay the bank.
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Example 4: Company A has just won a contract to

supply 100.000 bottle of soft drink. Company A
allows it’s client to make payment 5 months after
receiving shipment. All types of A’s cost can be
paid 2 months after the production process starts.
The bank offers the loan rate of 8,5%/annum and
requires A to finance 30% of the contract working
capital need by its own fund. Information related to
the contract is summarized as follow:
$/bottle
Selling price 5
Material 2,4
Depreciation 0,8
Transportation 0,1
Labor 0,6
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Question
a. Estimate the loan amount the bank should offer
A?
b. Estimate the appropriate loan term?
c. Estimate the earning before tax of A’s contract
d. Should the bank grant A the working capital
loan?

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Thank You!!!

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