Financial Management

Case Study LGAOP01

Submitted by: Almario G. Parco Jr., CPA

MBA 104
Cash Management

• Is the corporate process of collecting and

managing the cash, as well as using if for
( short term ) investing. It is the key
component of ensuring a company's
financial stability and solvency.
Corporate Treasurers of business
managers are frequently responsible for
over all cash management and the
related responsibilities remain to solvent.
What is Solvency?

• Is the ability of the company that meets

its long term Financial Obligation.
Solvency is essential to stay in the
business as it asserts a company's ability
to continue operations into the forcible
future.

• While a company needs a liquidity thrive.

A company that is insolvent is open for
BANKCRUPTCY.
What is Liquidity?

• It describe to the degree in which

an Asset or Security can be
quickly bought or sold in market
without affecting the asset price.
What is Bankruptcy?

• Is a legal preceding involving a person

or a business that is unable to repay
outstanding debts.
• Is starts with the petition of the
debtor. All Debtors asset shall be
evaluated and measured in cover up
or
• repay a portion of its total debts.
Cash management
system and process
CASH FLOWS
• it refers to all activities of the
companies pertaining to cash
and cash equivalents. Such as cash
received,
• checks payments receives, and
other receivables .
 Cash in Cash

BUYER (PAYS COMPANY BANK (DEPOSIT ACCOUNT

CASH) (RECEIVED CASH) CASH) COMPANY
 Receivable to Collection

Invoicing/Receivable Vendor Bank (it is where the Account Company Confirmation Official Receipt
(Issuance of Invoice) receipt deposited)
Cash Outflows

ACCOUNTS PAYABLE PAYROLL AND OTHERS

BANK
 Cash Management Process
Treasury
Invoicing/Receivable Payable Payroll

Journal Entry
Cash Purchase
Cash Management
General Ledger

Cash Receipts

Bank
Bank Reconciliation
Cash Management
Process
RECEIVABLE
• IT IS WHEN THE COMPANY PLACE ITS INVOICE TO THE CLIENTS
FOR COLLECTION
RECEIPTS
• IT IS WHEN THE CLIENT PLACED A CHECK OR ISSUE CHECK
AGAINST THE INVOICE ISSUED
BANK DEPOSIT
• IT WHEN THE COMPANY SHALL DEPOSIT THE CHECK TO THE
BANK ACCOUNT/ WITH. THE MAXIMUM DAYS OF CLEARING FOR
INTER- BANK IS ABOUT 3 DAYS.
CONFIRMATION- BANK STATEMENT
• WHEN THE DESPOSIETED CHECK CLEARED THROUGH , OR
CREDITED TO THE COMPANY BALANCES, THE COMPANY WILL
ISSUE A LETTER CONTIANING THE OFFICIAL RECEIPT,
INFORMING THAT THE AMOUNT ALREADY CREDITED.
Cash Management
Process (con’t)
PAYABLES- SUPPLIERS AND OTHERS ALL SUPPLIER
• RAISED THEIR INVOICES FOR COLLECTION. THUS ALSO THE
COMPANY SHALL SET THE PAYABLE SET UP FOR PAYMENTS
PAYROLL AND OTHER EXPENDITURE
• BASEDON THE TOTAL COLLECTED PER MONTH. THE COMPANY
SHALL ACCOMMODATE THE PAYMENTSALARIES AND OTHER
EXPENDITURES.THIS IS WERE THE BUDGETTING SHALL SET INTO
PLACE FOR THE PROPER DISTRIBUTION OF THE AVAILABLE
FUNDS IN THE BANKS
BANKS
• IS AN INSTITUTION WHEREIN COMPANY PUT ALL THE RESOURCE
COLLECTION FOR FUTURE NEEDS AND FOR THE COMPANY'S
OBLIGATION
• AND ALL ITS FUTURE PLANS.
Capital Structure
• IT IS HOW THE FIRM FINANCES ITS OVERALL
OPERATION AND GROWTH
• BY USING DIFFERENT SOURCES OF FUND. DEBTS
COMES IN THE FORM OF BONDS

• ISSUES OR LONG TERM NOTES PAYABLE, WHILE

EQUITY IS CLASSIFIED AS COMMON

• STOCK, PREFERRED STOCK OR RETAINED EARNINGS.

SHORT TERM DEBT SUCH AS

• SUCH AS WORKING CAPITAL REQUIREMENT IS ALSO

CONSIDERED TO BE PART OF THE CAPITAL
STRUCTURE.
Capital Structure –
Long Term Debt
Capital Structure - Equity