Identify and explain three alternative current asset investment policies. Use the DuPont equation to show how working capital policy can affect a firm’s expected ROE.
What are the reasons for not wanting to hold too little working capital? For not wanting to hold too much?
Differentiate between permanent operating current assets and temporary operating current assets. What does maturity matching mean, and what is the logic behind this policy? What are some advantages and disadvantages of short-term versus long-term debt?
