Business Finance

| July 16, 2015

Chapter 18, Balancing Act

Provide a 150 response to the question.

Working capital is defined as “Current assets minus current liabilities. How much in liquid assets a company has available to build its business” (investorwords.com, 2011). While there are several possible outcomes if a company failed to manage its working capital, the worst possible outcome would be the firm not having any funds to invest in equipment, physical plant, or new innovations. It is also possible a company may not have any cash assets to deal with unexpected financial shortfalls or problems if their working capital had been already used in some way.

In your Week 3 readings, you learn that having not enough working capital can reduce liquidity and render a firm unable to pay bills and expenses. However, having too much working capital reduces profitability of the firm. Obviously there needs to be a delicate balance when it comes to working capital.

Class- How would you recommend your organization balance working capital needs?

Chapter 11, Investing

Read Financial Management Chapter 11 attachment and answer the question below in 150 words.

Class- This is a great chapter because we are all interested in investing. We work hard for our money- we want our money to work for us!

What concepts did you find most useful from this chapter?

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