Working capital, Financial Management

Assignment Help:

Working Capital

Working capital is measured as the difference among organization present assets and its current liabilities. Therefore, it is interpreted by some as a measure of a firm's liquidity or its ability to pay its bills on a short-term basis. However, excess investment in working capital can be costly for a firm as the rate of return on an organization working capital is likely to be lower than alternative long-term investment project returns. Therefore, the maintenance of excessively high working capital builds too much liquidity and hence lowers overall returns.


Related Discussions:- Working capital

What do you mean by business risk, Q. What do you mean by Business Risk? ...

Q. What do you mean by Business Risk? Business risk is that portion of the unsystematic risk caused by the operating environment of the business. Business risk arises from the

Index amortizing notes (ina), In the Index Amortizing note, the princ...

In the Index Amortizing note, the principal is repaid according to an amortization schedule linked to a specific reference rate. It is structured in such a manner

Agency relationships, explain the relationship between shareholders and cre...

explain the relationship between shareholders and creditors

Tax consideration affect cost of debt and cost of equity, How do tax consid...

How do tax considerations affect the cost of debt and the cost of equity? As interest on debt is tax deductible to the issuing firm, as much higher the tax rate the lower the aft

Calculate the monetary performance of a firm, a) Year 2 ROCE = $400k / $1,0...

a) Year 2 ROCE = $400k / $1,000k = 40% Year 1 ROCE = $360k / $800k = 45% b) ROCE is an efficiency ratio that measures the monetary performance of a firm compared with the amo

Capital budegting, SCL Limited a highly profitable company is engaged in th...

SCL Limited a highly profitable company is engaged in the manufacture of power intensive products.

Stream of expected returns, Stream of Expected Returns Investment retur...

Stream of Expected Returns Investment returns can take many forms. An investor must consider all these forms to evaluate an investment option accurately. A brief description of

Financial statement analysis report, Financial statement analysis report: ...

Financial statement analysis report: 1. Perform a comparative analysis (horizontal analysis). Analyze two items on the balance sheet and two items on the income statement for

Benefit and drawback of maintaining many manufacturing sites, Discuss the b...

Discuss the benefits and drawbacks of maintaining multiple manufacturing sites like a hedge against exchange rate exposure. Answer:  To set up multiple manufacturing sites can

Balance sheet equation concept, Balance Sheet Equation Concept The His...

Balance Sheet Equation Concept The Historical Cost Concept needs support of two other concepts for practical reasons, viz. (i) The Money Measurement Concept (already discus

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd