FIN3120 - Chapter 16

What are current assets?

How are current assets on the balance sheet?

What is the most and least liquid assets?

What are current liabilities?

What are the 3 major current liability items?

What is working capital?

What is net working capital?

What is net working management?

Working capital management is a process that involves day-to-day activities related to:

What is the operating cycle?

Formula for operating cycle

How do you calculate the inventory conversion period?

How do you calculate the receivables conversion period?

What is the cash conversion cycle?

What is the formula for the cash conversion cycle?

What is the definition of the payables deferral period?

How do you calculate the payable deferral period?

What should we consider to determine our level of working capital investment? (How much short term investment should we hold onto?)

What are the three approaches to determining the level of working capital investment?

The conservative approach has:
______ current assets,
______ profitability
______ risk

The aggressive approach has:
______ current assets,
______ profitability
______ risk

How do you measure rate of return / profitability?

What is the current ratio?

What does the net working capital position measure?