• Why might an organization maintain more than necessary amounts of cash, accounts receivable, and inventory?
  • Why might another organization maintain the minimum amount of cash, accounts receivable, and inventory?
  • What would be the difference in risk and return for these companies?
• Would it be poor management to have large accounts payable and accrual balances even if they are paid on time?
• What is an aggressive financing approach?
  • Why might an organization choose to finance their working capital using an aggressive financing approach?
  • What is a conservative approach?
  • Why might another organization choose a conservative approach?
  • What would be the difference in risk and return for these companies?

Answer rating: 100% (QA)

1 Reasons for maintaining more than necessary amounts of cash accounts receivable and inventory Precautionary motive Organizations may maintain higher cash balances to have a buffer for unexpected exp... View the full answer