This chapter does not discuss the optimal level of

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: ributes positively to the firm’s value. This chapter does not discuss the optimal level of current assets and current liabilities that a firm should have. That issue is unresolved in the financial literature. Here we first use net working capital to consider the basic relationship between current assets and current liabilities and then use the cash conversion cycle to consider the key aspects of current asset management. In the following chapter, we consider current liability management. Net Working Capital working capital Current assets, which represent the portion of investment that circulates from one form to another in the ordinary conduct of business. net working capital The difference between the firm’s current assets and its current liabilities; can be positive or negative. Current assets, commonly called working capital, represent the portion of investment that circulates from one form to another in the ordinary conduct of business. This idea embraces the recurring transition from cash to inv...
View Full Document

Ask a homework question - tutors are online