Hahndorf Hotels Pte Ltd has a liability of $40 million due in 4 years. The company makes uses of leases to operate and the bulk of the firm’s assets are held in cash. The cash balance on the balance sheet as at the end of December 2021 reflects cash of $32 million. You may assume a flat term structure of interest of 6% per annum. Critically analyse the firm’s approach to managing its assets and liabilities and assess the potential risks if any.

Hahndorf Hotels Pte Ltd has a liability of $40 million due in 4 years. The company makes uses of leases to operate and the bulk of the firm’s assets are held in cash. The cash balance on the balance sheet as at the end of December 2021 reflects cash of $32 million. You may assume a flat term structure of interest of 6% per annum. Critically analyse the firm’s approach to managing its assets and liabilities and assess the potential risks if any.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 5P

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