Corporate Finance and Investment 1. Define “Working Capital” Working Capital=Current Assets-Current Liabilities =Accounts Receivable + Inventory - Accounts Payable “Working capital is how much in liquid assets that a company has on hand. Working capital is needed to pay for planned and unexpected expenses‚ meet the short-term obligations of the business‚ and to build the business.” 2. Give concrete measures how w.c. can be optimized (receivable‚ inventories (JIT
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an organization over a specific period. Budgeting describes the overall process of preparing and using a budget. Since budgets are such valuable tools for planning and control of finances‚ budgeting affects nearly every type of organization from governments and large corporations to small businesses. A small business generally engages in budgeting to determine the most efficient and effective strategies for making money and expanding its asset base. Budgeting can help a company use its limited financial
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The budgeting process and the end product‚ the budget‚ comprise two essential elements of multinational management: planning and control. Planning is the primary function of the budgeting process and the result‚ the budget‚ provides the basis for subsequent monitoring and control of activities. For a multinational firm‚ with geographically dispersed subsidiaries to coordinate and control‚ an ineffective planning and control system can be disastrous. For the typical multinational firm‚ the budgeting
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future." Budgeting actually refers to the process that‚ after the strategic plan of the business has been made‚ companies made a short term plan (usually one year) to meet the strategic purpose. Traditional budgeting has offered a lot of contributions in so many years’ practice. But it seems it is more and more unsuitable for the modern business. In this paper‚ I will give a brief induction for traditional budgeting; and then discuss the strengths and weaknesses of the traditional budgeting; last I
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investments in a variety of capital projects. Whether it is the need to purchase new machinery‚ expanding the production facility‚ or even buying new transport‚ all these projects require firms to make high investment now. In all these projects‚ the cash flow or the benefit is expected to be received for several years. A company at any time may have many capital projects in foresight. It is the responsibility of the finance manager to evaluate these projects through the capital budgeting process which involves
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The free land is not free The author of “In the Land of Free”‚ Edith Maud Eaton‚ with pen name Sui Sin Far‚ was not a direct immigrant from Asia to the United States‚ but she portrayed the harsh treatment Asian immigrants faced upon entering in the U.S. in the late 1800s. Sui Sin Far‚ working as a journalist for Fly Lea‚ had exposed the extreme injustice done to Asian Americans in U.S. while she was living on the west coast of the United States. In addition‚ Sui Sin Far’s narration throughout “The
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The journey concept contains a number of components. It can be perceived as a process which leads to a conclusion or destination. The journey process is more significant than the destination. William Shakespeare’s play ‘The Tempest’‚ J.M Barrie’s novel Peter Pan and Victor Flemming’s film The Wizard of Oz (1939)‚ all communicate journey concepts. Through analysing the ideas and textual conventions it will become evident that the ‘journey process’ is more important than the destination. Shakespeare
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WORKING CAPITAL AND FIXED CAPITAL AND ITS ADVANTAGES Introduction: A firm requires funds to acquire two types of assets : fixed assets and current assets .Fixed assets include land biulding ‚ plant‚ and machinary ‚ vehicles ‚ equipment etc.These assets relatively permanent in nature and are necessary for carrying on the bussiness .Current assets ‚on the other hand ‚are kept for supporting day-to-day operations and keep changing during the course of the business.They liquidated within short period
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Budgeting lies at the foundation of every financial plan. It doesn’t matter if you’re living paycheck to paycheck or earning six-figures a year‚ you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe‚ budgeting isn’t all about restricting what you spend money on and cutting out all the fun in your life. It’s really about understanding how much money you have‚ where it goes‚ and then planning how to best allocate those funds. Here’s
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Cases and Exercises for Value and Capital Budgeting Corporate Finance Academic Year 2012/2013 1. The treasurer of Amaro Canned Fruits has projected the cash flows of projects A‚ B and C as follows (measured in e): Year 0 Project A Project B Project C Year 1 70‚ 000 130‚ 000 75‚ 000 Year 2 70‚ 000 130‚ 000 60‚ 000 −100‚ 000 −200‚ 000 −100‚ 000 Suppose the relevant discount rate is 12% per annum. (a) Compute the profitability index for each of the three projects. (b) Compute the NPV for each
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