I need help with working capital questions
1 Definitions and Importance of Working Capitals
a)What is liquidity?
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b)Give two examples of working capital. Briefly explain each and then compare the liquidity with each other.
c)Why is it important to hold some liquid and some illiquid assets?
2 Identify and discuss ONE ratio used to evaluate capital and cash performance.
3 Find the following values for a lump sum assuming annual compounding:
a)The future value of $500 invested at 8 percent for one year
b)The future value of $500 invested at 8 percent for three years
c)The present value of $500 to be received in one year when the opportunity cost rate is 8 percent
d)The present value of $500 to be received in three years when the opportunity cost rate is 8 percent
4 Repeat Question 3 above, but assume the quarterly compounding conditions:
a)The future value of $500 invested at 8 percent for one year
b)The future value of $500 invested at 8 percent for three years
c)The present value of $500 to be received in one year when the opportunity cost rate is 8 percent
d)The present value of $500 to be received in three years when the opportunity cost rate is 8 percent
5 Evaluating Accounts Receivable Performance:
a)Define average collection period (ACP).
b)Is a smaller or larger ACP better?