Lecture Notes for FIN 04300 - Principles of Finance at Rowan (RU)

Notes Information

Material Type:Note
Class:FIN 04300 - Principles of Finance
University:Rowan University
Term:Fall 2010
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Chapter 13 Working Capital and Current Assets Management  Chapter Summary In the last two chapters we studied leverage and capital structure and dividend policy. These topics related to long-term capital. This chapter moves our discussion to the management of the firm's working capital or current assets. There is a trade-off between the risk of having too little working capital on hand and the reduced profitability that results from having excess working capital. In addition to discussing the issues related to determining the optimal level of working capital, this chapter also investigates the management of inventory and accounts receivable. I I I Understand short-term financial management. net working capital and the related tradeoffbetween profitability and risks. Net working capital is defined as the difference between the firm's current assets and its current liabilities, or as the portion of current assets financed with long-term funds. Firm's with ina...
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