Working Capital Management

A. Why might a business not want to hold too much or too little working capital? (Remember, working capital is current assets, not working capital minus current assets.)

Explain if the company that you selected for Assignment 1 has too much, too little, or just the right amount of working capital? How did you make this determination?

B. What are two (2) practical actions that the firm you selected for Assignment 1 can take to shorten its cash conversion cycle? Does the company need to shorten its cash conversion cycle and how do you know that (calculate the cash conversion cycle using the attached model)?

C. What working capital financing strategy is used by the company that you selected for Assignment 1. What actual financial data support the conclusion? Make sure that you complete the analysis using the attached Excel model that examines a firm’s working capital financing strategy.