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Fin 622 Corporate Finance / Topic for Discussion: “Working Capital Management”

Question:

The goal of Working Capital Management is to ensure that a firm is able to run its operations and it has sufficient cash follows to satisfy operational expenses and short term debt that is maturing in near future. Working capital management involves short term decisions i.e. managing the relationship between short term assets and short term liabilities. There are different working capital policies adopted by the companies. Following is some information about two companies:

 

  • ABC Corporation uses 20% of its short-term debt to finance the manufacturing plant, 65% to finance some of its permanent current assets and remaining 15% to finance temporary current assets.
  • XYZ Corporation maintained a large amount of net working capital and uses long-term debt to finance all long-term fixed assets and permanent current assets. Also, some temporary current assets are financed through long-term debt.

 

Requirement:

 

You are required to discuss which working capital policy both corporations have adopted and comment on their level (high, moderate or low) of risk. Provide your solution with logical reasoning.

 

Special Note:

  • Your answer should be to the point and based on logical facts.
  • Provide name of the policy and one line justification. Also, provide level of risk and one line justification for both corporations.

Note:

For acquiring the relevant knowledge watch the course video lectures, consult recommended books, and study additional material available online or in any other mode.

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Replies to This Discussion

Please Discuss here about this assignment.Thanks

Our main purpose here discussion not just Solution

We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions.

kindly start discussion

:(

Dear Students Don’t wait for solution post your problems here and discuss ... after discussion a perfect solution will come in a result. So, Start it now, replies here give your comments according to your knowledge and understandings....

I think ABC com is right

According to my observation, ABC corporation  ke Moderate policy ha or XYZ corporation ke Conservative policy ha

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