Fin320 ch14

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 14 Working Capital Management Working-Capital Management s Current Assets x cash, marketable securities, inventory, cash, accounts receivable accounts s Long-Term Assets x equipment, buildings, land s Which earn higher rates of return? Which higher s Which help avoid risk of illiquidity? Which illiquidity Working-Capital Management s Current Assets Assets x cash, marketable securities, inventory, cash, accounts receivable accounts s Long-Term Assets Assets x equipment, buildings, land s Risk-Return Trade-off: Current assets earn low returns, but help reduce the risk of illiquidity. help Working-Capital Management s Current Liabilities x short-term notes, accrued expenses, short-term accounts payable accounts s Long-Term Debt and Equity x bonds, preferred stock, common stock s Which are more expensive for the firm? Which expensive s Which help avoid risk of illiquidity? Which illiquidity Working-Capital Management s Current Liabilities Liabilities x short-term notes, accrued expenses, short-term accounts payable accounts s Long-Term Debt and Equity x bonds, preferred stock, common stock s Risk-Return Trade-off: Current liabilities are less expensive, but increase the risk of illiquidity. but Balance Sheet Balance Current Assets Current Fixed Assets Fixed Current Liabilities Long-Term Debt Preferred Stock Preferred Common Stock Common To illustrate, let’s finance all current assets To with current liabilities, with Balance Sheet Balance Current As...
View Full Document

This note was uploaded on 04/15/2009 for the course FINANCE FIN 320 taught by Professor Cpirinski during the Spring '09 term at CSU Fullerton.

Ask a homework question - tutors are online