Financial Management in the Short Term.fr.en

CLASSES
SHORT-TERM FINANCIAL MANAGEMENT
SESSION 1
INTRODUCTION TO THE COURSE
ACCOUNTING REMINDERS
CASH FLOW ANALYSIS
Francois LONGIN www.longin.fr

SESSION 1
INTRODUCTION TO THE COURSE
ACCOUNTING REMINDERS
CASH FLOW ANALYSIS
Purpose of session 1: review the main accounting tools used in finance (the balance sheet and
the income statement) which make it possible to calculate the cash flow and assess the quality
of cash management, analyze the cash flow by the external method of ratios and the internal
method of flow tables.
I) INTRODUCTION TO THE COURSE
1) Corporate treasury
2) Course outline
II) ACCOUNTING REMINDERS
1) The three business cycles: investment, operation and financing
2) The balance sheet
a) The large amounts of the balance sheet: fixed assets and current assets for assets, and
permanent capital and short-term debts for liabilities
b) The large amounts of the balance sheet: net fixed assets (IMn), inventories (S), the
realizable (R) and available (DIS) assets and equity (FP), medium and long debts
term (DMLT), provisions (PRO), operating debts (FOU) and short-term bank debts
(DCTb) as liabilities
c) Details of positions and operations relating to short-term operations
d) The main aggregates: working capital (FR), working capital requirement (WCR) and
treasury (TRE). Cash flow is linked to working capital and working capital
requirement by the relationship: TRE = FR BFR
3) The income statement
a) Expenses, income and calculation of the company's result
b) Cash management has an impact on the overall result of the company through the financial
result. The financial result can be improved by minimizing the cost of borrowing (to reduce
financial charges) and by maximizing the profitability of investments (to increase financial
income)
III) EXTERNAL ANALYSIS OF THE CASH FLOW BY LAMETHODE OF RATIOS
1) Cash flow, liquidity and risk of bankruptcy
2) Liquidity ratios
3) Measurement of the risk of bankruptcy (ratio analysis, method of rating, method of scores)
IV) INTERNAL CASH FLOW ANALYSIS
1) The Financing Table (TF). One of the objectives of the TF was to study the cash flow from the
working capital
2) The Table of Jobs and Resources (TER). The TER makes it possible to relate the cash flow to the
change in working capital and to the change in working capital requirement
3) The Financial Flows Table (TFF). The TFF makes it possible to link the cash flow to the
events generating it: investment, operation, donors (shareholders and creditors)
and State
Francois LONGIN www.longin.fr

COURSE MAP
SHORT-TERM FINANCIAL MANAGEMENT
•SESSION 1: Accounting reminders and treasury analysis ie
•SESSION 2: Relationship between long-term funding decisions and
Treasury
•SESSION 3: Treasury plans ie
•SESSION 4: Banking and finance vocabulary
•SESSION 5: Loans and short-term investments
•SESSION 6: Day-to-day treasury management
•SESSION 7: Financial risks
•SESSION 8: Currency risk
•SESSION 9: Interest rate risk
•SESSION 10: QUIZ
Francois LONGIN www.longin.fr

BUSINESS MODELING
CYCLE
INVESTMENT
CYCLE
FINANCING
CYCLE
OPERATING
DISBURSEMENTS and DISBURSEMENTS
TREASURY
ERR> 0
INVESTMENTS
TRE <0
FINANCINGFI
BANKS
FINANCIAL MARKETS
Francois LONGIN www.longin.fr

DEFINITION OF THE THREE CYCLES OF THE COMPANY
INVESTMENT CYCLE
The investment cycle consists of three phases: the selection of
investments, their use and their depreciation and eventual resale.
A CYCLE OF EXPLOITATION
The operating cycle corresponds to the productive activity of
the company, that is to say the transformation of raw materials
purchased into finished products sold to customers or to the
production of services. This operation requires the implementation
of the production tool and human resources. The operating cycle
corresponds to the consumption of material, labor and production
capital (the depreciation of investments during production).
FUNDING CYCLE
The financing cycle corresponds to all the financial operations
of the company related to the financing of investments, the various
phases of the operating cycle, the distribution of profits and the
operations of collection and settlement.
Exercise: show how these cycles, which give a functional description
of the company, are found in the accounting documents that are the
balance sheet and the income statement.
Question: finance textbooks always present the three cycles of
the financial circuit of the company (investment, operation and
financing) but only underline the importance of investment and
financing decisions. Why?
Exercise: Citing funding choices and decisions.
Francois LONGIN www.longin.fr