Define each of the following terms: a. Working capital; net working capital; net operating working capital b.

Question:

Define each of the following terms:

a. Working capital; net working capital; net operating working capital

b. Inventory conversion period; receivables collection period; payables deferral period; cash conversion cycle

c. Relaxed NOWC policy; restricted NOWC policy; moderate NOWC policy

d. Transactions balance; compensating balance; precautionary balance

e. Cash budget; target cash balance

f. Trade discounts

g. Account receivable; days sales outstanding; aging schedule

h. Credit policy; credit period; credit standards; collection policy; cash discounts

i. Permanent NOWC; temporary NOWC

j. Moderate short-term financing policy; aggressive short-term financing policy; conservative short-term financing policy

k. Maturity matching, or “self-liquidating,” approach

l. Accruals

m. Trade credit; stretching accounts payable; free trade credit; costly trade credit

n. Promissory note; line of credit; revolving credit agreement

o. Commercial paper; secured loan

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...