Part 1: Answer the following question in a minimum of 200 words
“Working Capital Management” Please respond to the following: Examine the key reasons why a business may not want to hold too much or too little working capital. Provide two (2) examples that illustrate the consequences of either situation.
Part 2: Respond and give your opinion on the post below. Min of 100 words
Working capital is the amount of liquid assets which a firm has at hand. Working capital investments are required to pay off unexpected and planned expenses, to build a business and meet the businessbs short-term duties and obligations. Working capital investment is the amount of money you require to expand your business, meet short-term business responsibilities and cover business expenses.It is crucial for management to make sure that the firm has sufficient funds for carrying out its everyday operations in a smooth manner. Cash conversion cycle assesses the period of time for which an organization would be divested of funds in the case it raises its investments, as a procedure of its strategies for business growth. An example of why a company would not want to hold too little working capital is because it cancause investors to believe that this business in risk of failure. These are some reasons that companies hold cash and how they decide how much cash to hold in support of these ongoing operations.
Part 3: Respond and give your opinion on the post below. Min of 100 words
According to Investopia.com a working capital is Working Capital = Current Assets – Current Liabilities. In other words, the funds available for the company to be able to pay short term debts (due within the year). If the company doesn’t have enough, then it cannot pay debtors because capital is tied up in inventory (sitting on the shelf). Eventually the company might even have to close.
If it has too much working capital, then the business is not using the funds effectively to make more. Basically the funds are sitting idle and only worthy at face value.