Financial Management: Principles and Applications, 13/e

Study Questions

1. 18–1. In the chapter introduction, we noted that computer company Dell is an industry leader in its working-capital management practices. Describe how the firm came to have this reputation.

2. 18–2. In Regardless of Your Major: Conflicting Objectives Lead to Problems in Managing a Firm’s Working Capital on page 578, we learned that the objectives of a firm’s sales force and the goal of maximizing shareholder wealth are not always in sync when it comes to managing the firm’s working capital. Describe why the sales force might want to have lax credit terms and how this impacts the firm’s investment in working capital.

3. 18–3. Why is the current ratio used to measure a firm’s liquidity?

4. 18–4. What is a firm’s net working capital, ...