Due 9:30 pm on Sunday (24 hour since I post the assignment ) Resource: Principles of Managerial Finance , Ch. 16 Complete the following case study: Integrative Case Casa Diseno p. 681 .( Chapter 16) Only complete the YELLOW HIGHLIGHTED AREA. ONLY DO the probelm highlighted in question D I have copied and paste chapter 16 and highlighted my part of the assignment. remember it’s a team assignment. 16 Current Liabilities Management Learning Goals LG 1 Review accounts payable, the key components of credit terms, and the procedures for analyzing those terms. LG 2 Understand the effects of stretching accounts payable on their cost and the use of accruals. LG 3 Describe interest rates and the basic types of unsecured bank sources of short-term loans. LG 4 Discuss the basic features of commercial paper and the key aspects of international short-term loans. LG 5 Explain the characteristics of secured short-term loans and the use of accounts receivable as short-term-loan collateral. LG 6 Describe the various ways in which inventory can be used as short-term-loan collateral. Why This Chapter Matters to You In your professional life ACCOUNTING You need to understand how to analyze supplier credit terms to decide whether the firm should take or give up cash discounts; you also need to understand the various types of short-term loans, both unsecured and secured, that you will be required to record and report. INFORMATION SYSTEMS You need to understand what data the firm will need to process accounts payable, track accruals, and meet bank loans and other short-term debt obligations in a timely manner. MANAGEMENT You need to know the sources of short-term loans so that, if short-term financing is needed, you will understand its availability and cost. MARKETING You need to understand how accounts receivable and inventory can be used as loan collateral; the procedures used by the firm to secure short-term loans with such collateral could affect customer relationships. OPERATIONS You need to understand the use of accounts payable as a form of short-term financing and the effect on ones suppliers of stretching payables; you also need to understand the process by which a firm uses inventory as collateral. In your personal life Management of current liabilities is an important part of your financial strategy. It takes discipline to avoid viewing cash and credit purchases equally. You need to borrow for a purpose, not convenience. You need to repay credit purchases in a timely fashion. Excessive use of short-term credit, particularly with credit cards, can create personal liquidity problems and, at the extreme, personal bankruptcy. FastPay Getting Cash into the Hands of Online Media Companies Digital advertising revenues hit $36.6 billion in 2012, a 15 percent increase over 2011, which was itself a record-breaking year. Online ads are everywhere, from Google search pages to YouTube videos to your Facebook News Feed. A challenge for the publishers of online ads is collecting money for those ads. The industry standard calls for publishers of online ads to send invoices within 30 days after an ad campaign is complete, and the advertiser then has 30 days or more to pay for the ad. Thus, companies that sell online advertising can accumulate large receivables balances, and collecting cash can be a slow process. Thats where the company FastPay comes in. FastPay makes loans to publishers, ad-tech companies, and other digital media businesses based on those firms accounts receivable. FastPay lends up to $5 million per borrower, with the terms of the loan based on the quality of the receivable. For example, if Pepsi were to enter into an agreement with YouTube to place online ads in videos, FastPay would grant a loan to YouTube on relatively favorable terms because it views Pepsi as a good credit risk. One area in which FastPay is expanding rapidly is in making loans to Facebook Preferred Marketing Developers, a network of small and mediumsiz…
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