Working Capital And Liquidity

Question 1

Costing of financing sources of Bonds and Equity

Answer 1

Bonds -
the price of the bonds is reflected in the costs of services or products purchases

Accounts payable can have a high implicitly cost

Equity
Required rate of return is the cost for company

Question 2

What is a revolver?

Answer 2

Short term borrowing
Bank allows the firm to borrow and repay during the life of the credit

Question 3

Moderate approach of finance looks for:
(Duration, finance short, financing long)

Answer 3

Match the duration of A and L

Long term debt to financing Permanent

Short term debt to financing Variable current

Question 4

Example of secondary source of liquidity

Answer 4

Liquida-te long term debt

Question 5

Observation of CURRENT ASSETS and LIABILITIES (1 YEAR). Are they current?

Answer 5

Pay attention of 1 year period

Inventory is a current asset

The first year payment of a loan is a current liability

Taxes are current liabilities