On the surface, it seems that a firm would want to hold high levels of current...

 

Transcribed Image Text:

On the surface, it seems that a firm would want to hold high levels of current assets to stay liquid and ensure that it can meet all its short-term obligations. However, current assets are not very productive and generate very low returns when held. Therefore, a firm must strike the balance of current assets that works best for it. In the following table, identify which current asset investment policy fits best with each firm. Hungry Whale Electronics minimizes current assets (including cash, marketable securities, accounts receivable, and inventory) as much as possible. Free Spirit Industries Inc. uses a current asset investment policy that results in the relatively longest cash conversion cycle. Cute Camel Woodcraft Company uses a current asset investment policy that gives a balanced cash conversion cycle between extremely long and extremely short. Moderate Current Asset Investment Policy Relaxed Current Asset Investment Policy O Restricted Current Asset Investment Policy On the surface, it seems that a firm would want to hold high levels of current assets to stay liquid and ensure that it can meet all its short-term obligations. However, current assets are not very productive and generate very low returns when held. Therefore, a firm must strike the balance of current assets that works best for it. In the following table, identify which current asset investment policy fits best with each firm. Hungry Whale Electronics minimizes current assets (including cash, marketable securities, accounts receivable, and inventory) as much as possible. Free Spirit Industries Inc. uses a current asset investment policy that results in the relatively longest cash conversion cycle. Cute Camel Woodcraft Company uses a current asset investment policy that gives a balanced cash conversion cycle between extremely long and extremely short. Moderate Current Asset Investment Policy Relaxed Current Asset Investment Policy O Restricted Current Asset Investment Policy

Answer rating: 100% (QA)

The image youve shared contains a question asking to identify the type of current asset investment p... View the full answer