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FIN722 - Corporate Finance GDB No. 2 Solution Fall 2015 Due Date Monday, Tuesday, January 26, 2016

FIN722 - Corporate Finance GDB No. 2 Solution Fall 2015 Due Date Monday, Tuesday, January 26, 2016

FIN722 - Corporate Finance GDB No. 2 Solution Fall 2015 Due Date Monday, Tuesday, January 26, 2016

Total Marks 10
Starting Date Tuesday, January 19, 2016
Closing Date Tuesday, January 26, 2016
Status Open
Question Title Working Capital Management
Question Description
Learning Objective:

Purpose of this activity is to give understanding that how working capital can be managed effectively for smooth business operations.

Graded Discussion Question:

Sunstone Limited, renowned manufacturer and supplier of home appliances, has established very good terms with its customers. However, to more strengthen these relations, company has decided to improve its policy and process of working capital management. For this, financial analyst of the company has conducted a rigorous analysis of working capital policies adopted by its competitors and proposed the following options:

Option # 1: Company should finance permanent current assets with short term financing.

Option # 2: Company should finance temporary current assets with long term financing.

Option # 3: Company should use hedging approach to finance its current assets.

Requirement: You are required to analyze the impact of above mentioned each option on profitability & risk and suggest which one is best to adopt. Support your answer by providing valid reasoning.

Learning Outcome:

After attempting this activity, students will be able to understand the appropriate approach that should be adopted by a business for managing its working capital needs.

Important Instructions:

Post your GDB comments (answer) against GDB # 02 rather than against lessons’ MDB.
Your discussion must be based on logical reasoning.
Your comments on the topic should not exceed 300 words.
Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
Obnoxious or ignoble answer should be strictly avoided.
Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.
For Detailed Instructions, please read GDB# 02 announcement

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