WORKING CAPITAL MANAGEMENT

Select a company in which you have an interest. For that company, examine its working capital (remember, working capital is current assets in contrast to net working capital, which is current assets minus current liabilities).

1. Explain why might a business not want to hold too much or too little working capital?

2. Explain if the company that you selected for Assignment 1 has too much, too little, or just the right amount of working capital? This determination should be based on comparisons to competitors, industry standards, etc.

3. Calculate the company's Cash Conversion Cycle - what is it (measured in days)?

4. What are two (2) practical actions that the firm you selected can take to shorten its cash conversion cycle?

5. What working capital financing strategy is used by the company that you selected? It is an aggressive strategy if current liabilities exceed current assets; it is a maturity matching strategy is current assets are approximately equal to current liabilities; it is a conservative if current liabilities are less than current asset. What actual financial data support the conclusion? Make sure that you complete the analysis using the Excel model that examines a firm's working capital financing strategy