Working capital provides an important indication of a firm's short-term financial health. Calculated as the difference between current assets and current liabilities, working capital tells whether an organization is able to cover its short-term liabilities (Sagner, 2010). If current liabilities exceed current assets, then it means a firm may have difficulty meeting its financial obligations in the next 12 months. Firms avoid such a scenario by effectively managing cash flow, cash balances, inventory, accounts payable, and accounts receivable. In this paper, the working capital structures of two companies are compared: Costco Wholesale Corporation (Costco) and Microsoft Corporation (Microsoft). The former is a retailer while the latter is a technology firm.
Working capital has three major components: accounts receivable, inventory, and accounts payable (Sagner, 2010). Accounts receivable are part of the company's current assets. They basically denote cash the company expects to receive in the short-term as a result of products or….

The company purchases smaller brands and then turns them into Starbucks at a fraction of opening up a location from scratch.
Session 3

My personal favorite tool for analysis is the regression test. This allows the research to see in-depth and thorough relationships between multiple variables, as well as see how relationships would change if circumstances evolved. Regression also allows for future forecasting, which can be a very valuable tool for financial analysis. On the other hand, my least favorite analysis tool is the standard ROI analysis tool. I find this analysis needs a ton of information and a large span of data in order to be useful in financial analysis. Moreover, this does not allow for very good forecasting measures, as regression analysis does.

Session 4

Venture capital is essentially a type of financial capital that is given to higher risk start up businesses. It is a type of private equity, but….

Working Capital
George has the sort of basic working capital practises one might expect from a small business. He keeps his inventory levels low during the slower months, but then ramps up inventory a little bit in advance of the busier months. George does seem to understand that the business is a little bit cyclical, and that he does not need to have massive inventories of any given item. So his working capital practices are designed to be able to pay the bank back month to month, more than anything else. These are sound and reasonable practices.

One of the biggest things is that the company basically goes month to month with its working capital. There is not a lot of flexibility with respect to the working capital needs, even though the cash flows appear to fluctuate for the business. The reality is that the business has done well, and George does….

Management System -- Working Capital Management
Working Capital: Theoretical Construct & Contribution to the Effectiveness to Advance Financial Management Practice

This work examines working capital and its theoretical constructs and contributes to the Effectiveness to Advancce Financial Management Practice. The term 'working capital' is reported in the work of Seidman (2004) to have several meanings "in business and economic development finance. In accounting and financial statement analysis, working capital is defined as the firm's short-term or current assets and current liabilities. Net working capital represents the excess of current assets over current liabilities and is an indicator of the firm's ability to meet its short-term financial obligations." (Seidman, 2004)

Introduction

The objective of this study is to conduct a critical review of the relevant literature in terms of its theoretical construct and its contribution and effectiveness in advancing financial management practice. The term 'working capital' is stated in the work of Seidman (2004) to….

Superior Living
orking capital is the current assets less the current liabilities (Kennon, 2012). The working capital is an important metric because it can have a significant effect on the company's short- and long-term decision making. The working capital is affected by the cash position, the inventories and the receivables, along with the short-term liabilities. The current ratio is simply the working capital in ratio format, the current assets divided by the current liabilities (Loth, 2012). If a company has insufficient working capital, this can represent a constraint on operations. The company may need to plow all capital it earns into servicing the liabilities, leaving little for capital projects. Additionally, working capital and current ratio are measures that creditors use to evaluate how much credit to give a company. Often, these measures are also used in the company's restrictive covenants in loans as well.

Aside from the current ratio, there are two….

Net Working Capital May Be Defined as:
A firm's current assets minus current liabilities.

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The total amount of liquid resources available to a business. ("Net working capital" 2005).

The above stated definitions are, in fact, two sides of the same coin since "the total amount of liquid resources available to a business" is actually its "current assets minus its current liabilities."

Net Working Capital is important for businesses because it represents the amount of current assets a firm would be left with if it was liquidated to pay the company's short-term debt. The amount of net working capital that a business decides to have available is a trade-off between profitability and risk. In other words, a large amount of net working capital means reduced profitability for a firm but a precarious working capital position puts it at greater risk. This is because holding of current assets is not very profitable as cash (or current….

Lawrence Sports Working Capital Management
Lawrence Sports is a manufacturer of sporting goods facing a fiscal dilemma in the early spring of 2011. Between the months of March and April, the company would experience an impasse within the context of its Current Cash Conversion Cycle. Here, an improved strategy for working capital management is called for.

First, with respect to the cash conversion cycle, Lawrence Sports largely draws is working capital from two sources. The first of these is its partnership with Mayo, the largest retailer in the world and buyer of 95% of all goods from Lawrence. The second of these is the Central Bank, which maintains the company's account balance at $50,000 through a system of automatic loans that are invoked any time the company's cash availability slips beneath this margin. Historically, Lawrence has employed an Aggressive approach to its capital management by relying on a wealth of sales and….

To counter this dependence, Lawrence Sports should create a three to six-month grace period before the price changes go into effect and increase marketing efforts to other retailers during this period. This will give the Lawrence Sports advance notice of any problems that might arise in implementing this plan as well as reducing its exposure to the Mayo Stores retail outlets, allowing for greater latitude in capital management.
In order to determine whether the new working capital management plan is working for the company, certain performance measures will be put into place. A dedicated individual in the accounts receivable department can track the changes in revenue that are created by the plan will be able to determine how the incoming cash flow compares to that which existed prior to the implementation of the working capital management plan, forming an effective means of measuring the success of this plan (Gass 2005).….

chief financial officer must pay close attention to receivables is no surprise to anyone. eceivables are an important potential source of money that can easily be converted into profit, just as easy as it can be lost forever. Management or recovery costs are also to be considered, since they can have a significant impact on the cash-flow creation process.
Beside well-known financial aspects, there are also other effects inefficient accounts payable/receivable management policies may produce on a company: Excessive receivables can both highlight and mask an insidious series of conditions that affect the health and growth of the business. (Sklar, 1998)

In every company there is some sort of conflict between the credit and the sales department. The credit department is responsible for collecting receivables in a swift manner and for not allowing sales that would later cause the company to have collection difficulties. On the other hand, the sales department….

Working Capital
If Starbucks has an increase of 20% in its revenue next year, this will affect a number of other elements of the financial statements. Often in budgeting, other line items are assumed to increase roughly in line with revenues. Thus, the company will see revenues of $11,558.4 million next year. Operating expenses will increase by the same percentage, so that the operating profit will also be increased by 20% to $2,073.6 million. However, the assumptions need to build in how much of an increase is expected in same-store sales, because that increase will not translate to certain cost increases. For example, a 20% increase in revenue with 10% coming from an increase in same store sales means that some administration expenses might only have increased 10% in the year. Thus, increases in efficiency will need to be taken into consideration when setting a budget based on an increase in….

The absolute value represented by the working capital is largely irrelevant for comparison between two different firms because of the different sizes of the firms. Current ratio is the better measure to compare between two different firms. Wal-Mart's current ratios for 004-006 were 1.70, 1.69 and 1.6 respectively. Target's current ratio over these three years was inconsistent, and Wal-Mart's declined. Target's was generally the weaker of the two.
Wal-Mart's asset turnover for 004, 005 and 006 respectively was .58, .49 and .39 based on the following calculations:

004: 56,39 / 99,15.5 = .58

005: 81,488 / 11,979.5 = .49

006: 308,945 / 19,170.5 = .39

Target's figures showed improvement over the three years in this area, but the figures are much lower than those of Wal-Mart. Thus, even though Wal-Mart's numbers are declining, they are stronger than Target's.

I would not invest in Target. The evidence presented here indicates that Target is not̾.

But even with no cost savings whatsoever, this project has a positive NPV.
e can see, therefore, that the greatest area of sensitivity is with the terminal value. The terminal value at present is worth $143 million of the NPV. If we break down the variables that go into the terminal value, however, we notice that the cost savings are critical. If SGA expense is not reduced, then the terminal value is reduced to $67 million and the total NPV for the entire project ends up being $98 million. This figure is less sensitive to the change in cost of goods sold.

e should also consider testing combined sensitivity of our shakiest projections. Sales may not live up to expectations and cost savings might not occur. If we assume no net income and no additional cost savings, the project will have an NPV. If we assume that our expectations for these….

Capital Budgeting
The aim of hospitals is to measure and improve the quality of health care service for the patients. Patient satisfaction is the foremost concern. However, to run a hospital, there are a lot of other factors are also involved; e.g. managing cost, budgeting, optimizing operations and increase patient satisfaction level. In order to achieve the desired level of performance, the hospital needs to be up-to-date with the latest technology.

In this era of technological advancements, every company has to maintain all their records on computer because it saves time and needs less effort than manual work. Our hospital has digitalized their data but every department has its own data base. In order to optimize the operations, hospital requires having a central data base system.

As Schuhmann (2009) stated in his article that the recent economic crisis has made it difficult for hospitals finance their capital expenditures. The capital assets purchased by….

Franchise
South Coast Railway is evaluating a proposal for a five-year franchise from the UK government. This proposal would be to operate a high speed commuter rail service from 2018 to 2022. The following report will examine the financials relating to this decision, and the decision-making heuristic.

Decision-Making

The decision at hand is essentially a capital budgeting decision. There are a few different ways to evaluate a capital budgeting decision. The most common is the net present value (NPV) technique. This relies on discounted future cash flows to make the decision. The principle behind the use of discounted cash flows is that money earned today can be reinvested, and because of that, a pound earned in the future is inherently worth less than a pound earned today. The value of future money decreases over time. The NPV method discounts those future cash flows back to present value, and compares then with the cash….

Financial atios
a) The free cash flow model implies that the value of the firm is the present value of the expected future free cash flows. Under this model, capital structure can affect firm value. The free cash flow model is as follows (Cherewyk, 2015):

FCF = EBIT (1-t) + depreciation -- CAPEX -- ? working capital -- ? other assets

In this portion of the model, the free cash flow is not affected by the capital structure. Interest on debt is not included in the free cash flow, nor is the tax effect of this interest. However, when the free cash flow is discounted, it is discounted using the weighted-average cost of capital, and that is affected by the level of debt and the cost of debt. By changing the WACC, the firm changes the rate at which the free cash flow is discounted, thereby affecting firm value. Generally, the cost of….