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Industry examples of good and poor working capital management policies.

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Cite examples of organizations that have good working capital management policies and organizations with poor working capital management policies. Discuss.

Please note that this is a discussion question (I don't need formulas). Also, I need specific company names.

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Cite examples of organizations that have good working capital management policies and organizations with poor working capital management policies. Discuss.

Organizations that have a healthy current ratio that is 2 or a little higher than 2 have good working capital management policies. They don't have difficulties in meeting their current liabilities. Those organizations that have their current ratio below 2 usually have difficulties in meeting their current liabilities and have poor working capital management policies. I give below an example of companies with good working capital policies and companies with not such good working capital policies.

ORGANIZATION WITH GOOD WORKING CAPITAL MANAGEMENT POLICY
THE CURRENT RATIO IS 2 OR LITTLE ABOVE 2.

Current Ratio (mrq): 2.887
Microsoft Corporation engages in the development, manufacture, licensing, and support of a range of software products for various computing devices. Its software products include operating systems for servers, personal computers (PC), and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; and software development tools. The company also provides consulting and product support services; and trains and certifies system integrators and developers. It sells the Xbox video game console and games, and PC games and peripherals. The company's online businesses include the MSN subscription and ...

Solution Summary

The solution of 798 words gives three good industry examples including a paragraph about each company.

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Similar Posting

Working capital management and Operating cycle

Q1
Two companies, A and B, have the following balance sheet accounts:
A B
Current assets $ 150 $ 800
Fixed assets 300 2200
Current liabilities 75 600
Long-term debt 75 1000
Equity 300 1400
a. Compute values for all of the ratios that measure
working capital for firms A and B.
b. Compare Firm A to B with regards to its need for
working capital and how it finances its working capital
(short-term vs. long-term financing).

2. The Latigo Company has the following financial information:
Sales $200
Cost of goods sold 100
Administrative expense 44
Depreciation 40
Interest expense 2
Tax 7
Net profit $ 7
Cash $ 5
Accounts receivable 20
Inventory 25
Fixed assets 50
Accounts payable 5
Note payable 15
Long-term debt 20
Equity 70
a. The current assets to sales ratio for the industry is 0.20. State whether Latigo make more or less use of working capital than the industry.
b. Compute the working capital turnover for Latigo and for the industry.
c. Compute the operating cycle and the cash conversion cycle for Latigo.
d. The industry average cash conversion cycle is 112 days. Compare the industry to Latigo and identify any inferences that you can make.

A.
CURRENT ASSETS TO SALES RATIO
CURRENT ASSETS 50
SALES 200
RATIO 0.25
It is utilizing working capital less efficiently as it has got higher ratio then the industry.
The lower the current-assets to-sales ratio, the less a firm needs to invest in working capital
to generate a dollar of sales, which usually means that the firm is utilizing its working capital in a more resourceful manner.

b. Compute the working capital turnover for Latigo and for the industry.

I need help with questions 1 and 2 in the problem section at the back of the attached chapter. I need all solutions in Microsoft excel along with the written answers to the questions.

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(See attached file for full problem description)

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