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Mba 503 Week 3 Cash Management

Cash Management
Companies need to understand cash management for the company to be effective. Financial goals will be difficult to achieve without a proven structure in place. If financial goals are not realized, then cash management likely played a role. Cash management is the building block of financial planning. Various methods of short term financing can also be essential to a successful business.
Our business, Covidien, Ltd., deals with “the development, manufacture, and sale of healthcare products for use in clinical and home settings worldwide. Our business operates through four segments: Medical Devices, Pharmaceutical Products, Imaging Solutions, and Medical Supplies” (Yahoo Finance, 2008). While our business is diverse, cash management and short term financing can be applied to our business. Focusing on the Covidien Pharmaceutical Products segment of the business, this paper will describe cash management and short term financing.
Cash Management Techniques
Cash management techniques include investing, budgeting, spending and saving the company’s money in ways that increase profits or otherwise benefit the company. Ways to increase a company’s profits include financial decisions about controlling assets, nature of asset growth, shifts in asset structures, patterns of financing, and financing decisions. These techniques are used to change the company’s financial assets to improve their stance in their respective marketplace. “In most firms, fixed assets grow slowly as productive capacity is increased and old equipment is replaced, but current assets fluctuate in the short run, depending on the level of production versus the level of sales. When the firm produces more than it sells, inventory rises. When sales rise faster than production, inventory declines and receivables rise” (Block & Hirt, 2005, p. 146). Adding assets to the company’s operations adds value and capital to the business. The nature of asset growth, like controlling fixed assets, is...