Examine the key reasons why a business may not want to hold too much

Examine the key reasons why a business may not want to hold too much

Working Capital Management. Please respond to the following:

Examine the key reasons why a business may not want to hold too much or too little working capital. Provide two (2) examples that illustrate the consequences of either situation.

From the scenario, analyze TFC’s cash budget to determine key methods in which the budget may be optimized (e.g., by renegotiating terms and conditions on some of its payables). If you believe that there is room for improvement, recommentend key strategies for TFC to use in order to optimize its cash budget. If you do not believe that this is the case, provide a rationale for your response.

Solution preview

Working capital is used to assess a firm’s ability to meet its short-term financial obligations and involves investment in short-term assets like cash and cash equivalents. There are various reasons why a firm holds working capital. First, working capital in necessary for meeting the day-to-day operational transaction needs………………………

APA

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