Performance Management

Webinar DAY 3
Instructor
ACCA FM Sep 2021 Rizwan Maniya

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

How to remain connected after webinar

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How to remain during Webinar

Chat Box Given

Email - Rizwan@vifhe.com WhatsApp Number +923212436266
Performance Management

Day 1 – Investment Appraisal & WACC (Business Finance)

Day 2 – Business Valuation & Business Finance

Day 3 – Working Capital & Risk Management

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

Working Capital
Working Capital

Objectives Management Cash operating Problems

cycle

Create Balance
Individual Ratios
Profitability Liquidity components

Liquidity Operating
cycle

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

Receivable Management

Receivable
Management

Factor of Credit
Credit Control Policy
Control

Administrative cost Competitor credit terms

C vs B - More credit C vs B - Giving discount

Level of risk Liquidity position
Expertise available

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

 Receivable Management
Performance Management

Credit Control Policy

Assessing Setting Collection of Monitoring

credit worthiness credit limits Over due debt credit system

1. Two reference (bank and trade

reference) 1. Reminders
2. Credit rating agencies 2. Telephone calls
3. Published financial 3. Personal visit
information 4. Supplies with held
4. Press comments 5. External debt agencies
5. Personal visit to the 6. Legal case
concerned company
6. Past company records about
customer
7. Credit rating system

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

Key Exam Tip –

1. Complete in 36 Minutes
2. Perform calculations that are carefully structured and clearly set out,
with all workings shown in an easy-to-follow layout.
3. Write accurately and coherently, using simple English rather than
long, rambling sentences which have no structure and no real content
Email - Rizwan@vifhe.com WhatsApp Number +923212436266
Performance Management

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management
Page 50

Types
Transaction Translation
❑ Time delay Economic ❑Equities, assets,
between
❑Long term version liabilities or
entering into income will
of transaction risk
a contract change in value
and settling it

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Performance Management
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Calculation
Terms Techniques
❑ Forward contract
❑ Money market
Spot rate : Lower rate Higher rate
2. Direct quote:
Lower rate = Selling rate Higher rate = Buying rate

3. Indirect quote:
Lower rate = Buying Rate Higher rate = Selling Rate

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management
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Forward contract
Define
❑Cash market transaction
❑Delivery of the commodity is deferred
❑ Have no standards and aren't traded on exchanges

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Performance Management
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Money market hedging

Define
Borrowing and lending in multiple currencies, for example to
eliminate currency risk by locking in the value of a foreign
currency transaction in one's own country's currency

Calculation
Payment Receipt

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Performance Management
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Lac ki batien - DcB

1. Deposit foreign currency now
Formula = FC/ 1+i
1. Convert the above required foreign
currency into local currency at spot
2. Borrow local currency until the time
of payment
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Performance Management
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Lac ki batien BcD

1. Borrow foreign currency now
Formula = FC/ 1+i
1. Convert the above borrowed foreign
currency into local currency at spot
2. Deposit local currency until the time
of receipt
Email - Rizwan@vifhe.com WhatsApp Number +923212436266
Performance Management
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Reasons for exchange rate fluctuation

IRPT PPPT TFE ET

Four way equivalence theory

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Performance Management
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Interest rate parity theory

Predicting the forward exchange rates

Difference interest Difference between the spot

rates and future exchange rate

Higher interest rate Higher depreciation of forward

rate

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Performance Management
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Purchase power parity theory

Predicting the future foreign exchange rates

It would cost same for goods and services in every country

Higher inflation rate Higher depreciation of currency

Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

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Email - Rizwan@vifhe.com WhatsApp Number +923212436266

Performance Management

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Email - Rizwan@vifhe.com WhatsApp Number +923212436266