Identify at least five (5) components of working capital and discuss how they can be effectively managed to improve the financial performance of a firm. Support your discussions with empirical literature.
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- The Natural Capital Protocol sets out four stages which businesses should conplete when assessing their dependencies and impacts on natural capital.What are the four stages in the Natural Capital Protocol?A. Risk: markets: processes; stakeholdersB. Innovation: sustainability: risk management; accountabilityC. Labour; land; capital; entrepreneurshipD. Frame; scope; measure and value; applyDiscuss the concept of working capital management and its significance in financial decision making.Which of the following statements is correct? Select one: A. Working capital is the initial capital injected into a company. OB. Working capital is equal to the net investment in current assets and current liabilities. C. Working capital is the minimum amount of capital required to run a business. OD. Working capital is a source of long-term finance.
- Which of the following BEST describes Financial Condition Analysis (FCA)? Group of answer choices it mainly uses financial information in analysis it is a daily assessment of financial performance it evaluates the costs and benefits of financial analysis it assesses the impact of socioeconomic/organizational factors on financial conditionExplain the relationship between the weighted average cost of capital (WACC), the maximization of firm value, and financial decision making.What are the three financial measurements necessary to adequately measure a firm’s performance?
- Explain why the required rate of return on a firm's assets must be equal to the weighted average cost of capital associated with its liabilities and equity. Explain using the concepts from the course.What is the primary purpose of computing the cost of capital? a. To determine the market value of the company's shares b. To assess the company's liquidity position c. To evaluate the profitability of investment projects d. To compare the company's performance with industry peerswhat comment can be made on this or what can be added to it? The weighted average cost of capital is a calculation that can be done by a business to determine how much it will cost to borrow money to generate capital (WACC, n.d.). The result of this calculation will help business determine if financing a project is an investment that will yield positive returns (WACC, n.d.). The WACC takes into account the cost of equity and the cost of debt to figure out whether an investment is worth taking on (WACC, n.d.).
- Explain the meaning of the terms working capital and working capital management in a succinct manner. Explain the link between current asset policy and liquidity, profit, and risk as well as any other relevant information. Which policy, in your opinion, is the best?What are two crucial presuppositions we make when we choose to use the present cost of capital of a firm to evaluate the profitability of projects in which we invest? Be thorough.Explain briefly what the terms working capital and working capital management imply. Explain the link between current asset policy and liquidity, profit, and risk as well as any other considerations. Which policy do you believe is the best?
