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2 years ago

What are the two major components of a working capital management strategy

Business

1 answer:

Sliva [168]2 years ago

6 0

Answer:

The two major components of Working Capital are Current Assets and Current Liabilities. One of the major aspects of an effective working capital management is to have regular analysis of the company's currents assets and liabilities.

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In many countries, people hold money as a cushion against unexpected needs arising from a variety of potential scenarios (e.g.

RoseWind [281]

Explanation:

precautionary demand for money is classified as money that are held to cover for unforeseen occurrence e.g, an accident or illness.

It should also be noted that: The amount of money held for such purposes is broadly dependent on the level of income and expenditure.

With more income the precautionary demand will increase because there are more likely to be surprises in the timing or magnitude of the correspondingly high expenditures

A higher rate of interest represents a higher opportunity cost of holding money for any reason, including the precautionary reason, and so leads to lower precautionary holdings.

7 0

3 years ago

Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note t

dolphi86 [110]

Answer and Explanation:

The computation of the MIRR is shown below:

But before that terminal cash flow required to calculate

Year Cash Flows FV Factor Formula Terminal Value

(Cash Flow × FV Factor)

0 ($1,000)

1 $450 1.21 (1 +10%)^(2) $545

2 $450 1.1 (1 + 10%)^(1) $495

3 $450 1 1 $450

Terminal Cash Flow $1,490

now the MIRR is

$MIRR = \sqrt[n]{\frac{terminal\ cash\ flow}{initial\ investment} } - 1\\\\= \sqrt[3]{\frac{\$1,490}{\$1,000} } - 1$

= 14.22%

As it can be seen that the MIRR is more than the WACC so the project should be accepted.

8 0

3 years ago

9)What is the dominant strategy for bidders in an English oral auction?9)A)Bid until the previous bid price equals the reservati

Sophie [7]

Answer: B) Keep bidding until all other bidders quit, regardless of your reservation price.

Explanation: Familiar to English auctions, the bidders are aware of the prices of items on sale and the numbers of other bidders. This price is known as the reserve or reservation price which is the limit on the price of the item on sale set by the seller (that is the lowest price the seller is willing to sell the item). The bids start at a low price and keeps coming in until there are no more bids irregardless of the reservation price set. It probably depends on how much you value the item on sale and are willing to pay for it. Not necessarily on the reservation price.

3 0

3 years ago

Klingon Cruisers, Inc., purchased new cloaking machinery five years ago for $20 million. The machinery can be sold to the Romula

muminat

Answer:

1) Book Value= $16,464,000

2) Market Value = $19,080,000

Explanation:

The first question is to determine the book value of Klingon's assets today. Book value is the carrying value of the business in its balance sheet.

Book Value = Net working Capital + Current Liabilities + Net Fixed Assets

Net working Capital= $226,000

Current Liabilities= $700,000

Net Fixed Assets= $15,500,000

Book Value = $226,000+ $700,000+$15,500,000= $16,464,000

2) Calculate the market value

The formula for market value = How much the machinery was sold to Romulans today+ today's value of the current assets if they are liquidated

The market value of assets is a function of the current market price they can be sold for and received on the day of the valuation

Market Value= $18,000,000 + $1,080,000= $19,080,000

4 0

3 years ago

Gdp data can be criticized as being inaccurate measures of economic welfare because:

valina [46]

GDP data can be criticized as being inaccurate measures of economic welfare because:
1. GDP data do not take into consideration all the changes in product quality.
2. The data do not take into consideration the negative effects which economic activities have on the environment.
3. The data do not take into account changes in the amount of leisure.

4 0

3 years ago