Alternatives in short term financial instruments

Hausarbeit, 2008

17 Seiten, Note: 2,0


Table of Content

Executive Summary

List of Figures

1 Introduction

2 Financial Planning, statement, and models

3 Corporate finance
3.1 Working capital, and management
3.2 Short term assets
3.2.1 Instruments for short term balance sheet
3.3 Current Liabilities

4. Interim financing "short term decision making"
4.1 Options for short term financing
4.1.1 Bank loans


Appendix Integral Total Management Checklist


Executive Summary

This assignment shows a description of short-term financial instruments in corporate finance. First of all, the aim is not to point out the main differences between short term, and long term financial instruments. The present report describes an overview of financial planning, statement, and models, furthermore it will handle with working capital management and its importance according to corporate finance, always tried in according to short term financial issues. These introductory explanations are supplemented by an overview of short term assets and liabilities. To be continued it will give a sum up of the characteristics in interim financing and short term finance decision making.

List of Figures

Figure 1: Financial planning

1 Introduction

Most of Company strategic management actions, respectively financial planning, are dedicated to long term financial decisions. Firms need to know how, and what to invest in working capital, plant, and equipment that is required for organizational success, and expansion. The necessity of predefining a company’s future economic viability, and course of action for several years are requiring a stabile capital structure[1] Effective long-term financial planning and good budget management is a mostly more or less heavy-handed and not easily reversed process[2]. On the other Hand companies have to struggle with sudden negative economic impulses in context with a company’s progress that will need immediate response. For that reason short term financial planning and instruments are available to overcome such a period.

To be repeated, the aim of this assignment is to show the overall picture of short term financial instruments and its importance regarding financial planning as a whole. Furthermore it will try to describe the criteria’s for short term decision making, focus on a specific instrument of short term financing, named bank loans.

2 Financial Planning, statement, and models

Planning is the process of determining organizational aims, selecting the line of action, initiating activities required to transform plans into action, and evaluating the net outcome. Financial planning as a whole concept requires an extensive study and investigation of capital data. It is a continuous process of navigating and appropriating financial resources to fulfil strategic goals, and objectives[3].

In detail some key financial ratios,

Such as leverage ratios, liquidity ratios, Efficiency ratios, profitability ratios, and market value ratios must be measured to show company’s current and future performance[4].

illustration not visible in this excerpt

All numerated items above are even significant for financial statements or reports that lead to valuable information’s about a company. It is defined as a sum up report that shows how a firm has used the funds entrusted to it by its shareholders, and lenders, and of course what is its current financial position[5]. This will help any Manager to monitor their own company’s performance, or to comprehend the policies of a competitor, and to check the economic health of a customer[6]. The basic financial statements are the balance sheet, which shows firm's assets, liabilities, and net working capital. Secondly the income statement, also named as profit and loss account, which shows how the net income of the firm is arrived at over a stated period, the cash flow statement, which shows the inflows and the outflows of the statement by the firm's activities during a stated period, and the statement of retained earnings, which explains the changes in a company's retained earnings over the reported period.

Financial statements are not only for understanding financial events in the past, is also a starting point to developing a financial planning model for the future[7]. Usually there are four major types of planning pathways: strategic, tactical, contingency, and managerial. Strategic planning involves determining organizational goals and how to achieve them. This usually occurs at the top management level. Tactical planning is concerned with implementing the strategic plans and involves middle and lower management. Contingency planning anticipates possible problems or changes that may occur in the future and prepares to deal with them effectively as they arise[8]. As it shows, at the end there is no one way that lead to the optimal financial strategy[9].


[1] See: Brealey, Myers, Allen (2007), p.801

[2] See: Brealey, Myers, Allen (2007), p.787

[3] See: (accessed July 16, 2008)

[4] See: Brealey, Myers, Allen (2007), p.801

[5] See: (accessed: July 07, 2008)

[6] See: Brealey, Myers, Allen (2007), p. 806-807

[7] See: Brealey, Myers, Allen (2007), p.801

[8] See: Marshall (1992)

[9] See: Brealey, Myers, Allen (2000/2007), p.806-807

Ende der Leseprobe aus 17 Seiten


Alternatives in short term financial instruments
FOM Hochschule für Oekonomie & Management gemeinnützige GmbH, Berlin früher Fachhochschule  (FOM - MBA Course)
Financial Management
ISBN (eBook)
ISBN (Buch)
485 KB
14 Einträge im Literaturverzeichnis, davon 6 Internetquellen.
Short, Financial, Management
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Dr. Kadir Yilmaz (Autor), 2008, Alternatives in short term financial instruments, München, GRIN Verlag,


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