Chapter 26
Working Capital Management
I. Chapter Outline
The following chapter outline is correlated to the PowerPoint Lecture Slides. The PowerPoint slides
are referenced in bold. Alternative Examples to selected textbook examples are also available in the
PowerPoint Lecture Slides and are also referenced in bold.
26.1 Overview of Working Capital (Slide 5)
• The Cash Cycle (Slides 6–8)
26.2 Trade Credit (Slide 17)
• Trade Credit Terms (Slides 18–19)
• Trade Credit and Market Frictions (Slides 20–22, 27–29)
– Cost of Trade Credit (Slides 20–22)
• Example 26.2 Estimating the Effective Cost of Trade Credit (Slides 23–24)
• PowerPoint Alternative Example 26.2 (Slides 25–26)
– Benefits of Trade Credit (Slide 27)
– Trade Credit Versus Standard Loans (Slides 28–29)
• Managing Float (Slides 30–35)
– Collection Float (Slides 30–31)
– Disbursement Float (Slide 32)
– Electronic Check Processing (Slides 33–35)
26.3 Receivables Management (Slide 36)
• Determining the Credit Policy (Slide 36)
– Establishing Credit Standards (Slide 36)
– Establishing Credit Terms (Slide 36)
– Establishing a Collection Policy (Slide 36)
• Monitoring Accounts Receivable (Slides 37–39, 47)
– Accounts Receivable Days (Slide 37)
– Aging Schedule (Slide 38)
112 Berk/DeMarzo • Corporate Finance, Fourth Edition, Global Edition
IV. Spreadsheet Solutions in Excel
The following Problems for Chapter 26 have spreadsheet versions of the problems available: 4, 13,
and 15.
These spreadsheets can be downloaded from the Instructor’s Resource Center at: