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?
Required Resources
Text
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial finance [Electronic version]. Retrieved from https://content.ashford.edu/
Chapter 5: Estimating Cash Flows
Chapter 6: Capital Budgeting Investing to Create Value
Article
Biery, M.E. (2013, April 12). Businesses seeking working capitalsurvey . Forbes. Retrieved from http://www.forbes.com/sites/sageworks/2013/04/12/businesses-seeking-working-capital-survey/
Multimedia
Wiley CMAexcel (2016, February 10). Free CMA exam lesson: Capital budgeting process . Retrieved from https://www.youtube.com/watch?v=h_ouhhkEaKg
INTELECOM. (Producer). Management of Working Capital Case Study: “George’s Trains”. [Video File]. Retrieved from the Intelecom Video Library.
