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Fin 300 Exam 4 Correct answers latest update
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Fin 300 Exam 4 Correct answers latest update
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Fin 300 Exam 4 Working Capital - ANS> amount of the firm's current assets (cash, accounts receivable, marketable securities, inventory and prepaid expenses) Net Working Capiatal - ANS>Current Assets - Current Liabilities Benefits of Working Capital - ANS>Higher Liquidity (lowers risk) Cost of Working Capital - ANS>Lower Returns - $$ invested in lower returning securities rather than production Current Ratio - ANS>Current Assets/Current Liabilities Return on Assets - ANS>Net Income/Assets Conservative Approach - ANS>Finance all fixed assets, permanent current assets, and some temporary with LT debt or equity. Short Term Financing is used for the remaining temp. current assets Lower risk, lower return Moderate Approach - ANS>Maturity Matching Finance fixed assets and permant current assets with Long term funds and temporary current assets with short term fnuds Moderate Risk, moderate return Aggressive Approach - ANS>Use Short Term debt finance at least the temporary current assets, and possibly some of the long -term fixed assets Conservative Financing - ANS>Current Liabilities less than Total Current Assets Agressive Financing - ANS>Current Liabilities greater than Total Current Assets Moderate Financing - ANS>Current Liabilities equal Total current assets Short Term Financing - ANS>More profitable (higher ROA) because lower interest rate but more risky Long term Financing - ANS>Safer but less profitable (lower ROA) because of higher interest ratesThe benefits of buying summaries with Stuvia:
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