Capital management

Question 1

WORKING CAPITAL MANAGEMENT (350 WORDS)

Using the attached article by Pasandideh and Darabi (2015) assigned in this unit, “The Effect of Working Capital Strategies on Performance Evaluation Criteria,” discuss the importance of effective working capital management, its role in meeting the firm’s strategic objectives, and its effect in value creation. Be sure to provide examples of metrics used to evaluate working capital management and discuss how these metrics should be interpreted. Provide support for your discussion.

Question 2

The availability of funds effects the capital budgeting decisions. The amount of funds available for capital expenditures will be either limited or unlimited. Funds would be considered unlimited when a firm is willing to acquire, through borrowing or equity, any amount of capital as long as the return on the investment is higher than the cost of the funds. When the funds that a firm will make available for capital investment are limited, and the firm has more opportunities for profitable investments than the limited funds can cover, the condition is described as capital rationing.

Your assignment is to focus on the following:

• Describe how capital-budgeting decision criteria would be different in a capital-rationing situation than in a situation in which capital rationing was not necessary, and explain the reasons for the difference in criteria.
• Describe the discounted-cash flow technique or techniques you would recommend in a capital-rationing situation and explain your reasons for your recommendation.

Write your response as a one-page memo

Question 3

FACTORS INFLUENCING CAPITAL STRUCTURE

Based upon the readings of the attached 3 articles in this unit and your understanding of capital markets, discuss the following questions:

• What difference is there between investors and the general public?
• What role do investors play in the evolution of capital markets?
• What role do financial institutions play in the capital markets?
• What role do governments play in the capital markets?
• What are the primary factors that influence decisions regarding the capital structure of corporations?
• How do these factors change over time?
• What markets do we refer to with the term “capital markets”

500 words (references page words not included)

Ensure that all three articles are cited in text and in the references page.