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Impacts of a company's finances

Can someone please provide information on the following:

(1) how working capital can impact a company's finances

(2) what the company can do to handle short-term debt that is coming due

(3) explain current ratio, discuss its implications, and describe a good current ratio

(4) describe briefly how businesses make capital budgeting decisions

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(1) how working capital can impact a company's finances

A company's working capital is the total of their assets minus their liabilities; it is the amount of cash that they have to operate the business and to run the daily activities that the business requires. If working capital is less than what is required for the day-to-day operations of the company, the company will have to look to other means of financing until working capital increases. Companies with a low amount of working capital aren't favored by investors because it can be the first indicator of poor money management. It shows that the company is having trouble acquiring the cash that they need in order to be considered a going concern -- which is a good thing. We want companies to be a going concern, as it shows that in the near future, the company has the working capital required to finance their operations. When they can no longer be considered a going concern, it ...

Solution Summary

(1) how working capital can impact a company's finances

(2) what the company can do to handle short-term debt that is coming due

(3) explain current ratio, discuss its implications, and describe a good current ratio

(4) describe briefly how businesses make capital budgeting decisions

$2.19