Working Capital, Capital Rationale and Journal Post

Week 3 Discussions and Required Resources

Three-part assignment – All parts must be at least 200 words unless otherwise noted. Please read all attachments and follow ALL instructions.

Part 1: Working Capital

Read the journal article, “Businesses Seeking Working Capital-Survey – http://www.forbes.com/sites/sageworks/2013/04/12/businesses-seeking-working-capital-survey/ .” Based on the information presented in the article, discuss the following:

  • How should a      business use working capital analysis?
  • Which is more      important to the short-term lender: the stock of cash or the flow of cash?
  • Is it possible      in today’s business to operate with no current liabilities?

Part 2:   Capital Rationale

Compare and contrast the Internal Rate of Return (IRR), the Net Present Value (NPV) and Payback approaches to capital rationing. Which do you think is better? Why?  Provide examples and evidence from two articles.

Part 3: Capital Budgeting

Review the following video: https://youtu.be/h_ouhhkEaKg

Critically reflect on the importance of capital budgeting. Why is this such a heated subject in many boardrooms? How does capital budgeting promote the financial health of an organization? How will you use the financial techniques you have learned this week to promote the financial health of your organization?

 
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