Chapter 27
Short-Term Financial Planning
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.
27.1 Forecasting Short-Term Financing Needs (Slides 5–10)
• Table 27.1 Projected Financial Statements for Springfield Snowboards, 2019, Assuming
Level Sales (Slide 7)
• Seasonalities (Slides 11–15)
• Figure 27.1 Sales Seasonality (2010–2015) (Slide 13)
• Table 27.2 Projected Financial Statements for Springfield Snowboards, 2019, Assuming
Seasonal Sales (Slide 14)
• Negative Cash Flow Shocks (Slides 16–20)
27.2 The Matching Principle (Slide 27)
• Permanent Working Capital (Slide 28)
27.3 Short-Term Financing with Bank Loans (Slide 36)
• Single, End-of-Period Payment Loan (Slides 37–38)
• Line of Credit (Slides 39–43)
• Bridge Loan (Slide 44)
• Common Loan Stipulations and Fees (Slides 45–55)
©2017 Pearson Education, Ltd.
27.4 shows a situation in which Springfield has an opportunity to increase sales, but it must spend
money on marketing and on capital expenditures.
27.2 The Matching Principle
The matching principle states that short-term needs should be financed with short-term debt, and
long-term needs should be financed with long-term funding. It is necessary to distinguish between
27.3 Short-Term Financing with Bank Loans
Here, the authors describe three different types of short-term bank loans: a single, end-of-period
27.4 Short-Term Financing with Commercial Paper
27.5 Short-Term Financing with Secured Financing
This section discusses the use of accounts receivable and inventory as collateral for short-term loans.
IV. Spreadsheet Solutions in Excel
The following Problems for Chapter 27 have spreadsheet versions of the problems available: 4 and -6.