Management and Organizational Studies 2310A/B Study Guide - European Cooperation In Science And Technology

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Doug Hazlewood

Document Summary

Management: managing current assets and current liabilities. Too large an investment in current assets can reduce profitability. Too little an investment in current assets increases liquidity risk. Too little current liability financing can reduce profitability. The more predictable its cash inflows, the less net working capital a firm needs. Profitability the relationship between revenues and costs generated by using the firm"s assets both current and fixed in productive activities. A firm"s profits can be increased by: increasing revenues, decreasing costs. Risk probability that a firm will be unable to pay its bills as they come due. Technically insolvent describes a firm that is unable to pay its bills as they come due. The more nwc, the more liquid the firm and therefore, the lower its risk of becoming technically insolvent. Percentage of total assets = current assets/total assets. Note: current liabilities/total assets represents the percentage of total assets that have been financed with current liabilities.