Why is an analysis of working capital important?
What will be an ideal response?
An analysis of working capital is important in order to determine a firm's capacity to meet current obligations. In analyzing working capital, the normal working capital requirements of both a company and industry should be considered. In addition, the components of working capital (such as accounts receivable, accounts payable and so forth) should be assessed. For example, although accounts receivable are considered to be liquid, an increase in the average days receivables (which is accounts receivable divided by annual sales on credit times 365) that are outstanding may be an indication that a higher level of working capital is needed for the efficient running of the operation. In addition, companies frequently have account receivable financing, some with recourse provisions. In this scenario, comparisons among companies in the same industry may be distorted.
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A) develop questions that must be answered with several sentences. B) use leading questions. C) make the survey adaptive. D) use descriptors such as "often" or "frequently." E) use compound questions.
When you're writing a business plan, the ________ section explains the purpose of your business and what you hope to accomplish
A) mission and objectives B) design and development C) products and services D) financial projections and requirements E) monitor-and-control