Management and Organizational Studies 2310A/B Chapter Notes - Chapter 18: Asset Turnover, Current Liability, Scenario Analysis

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

Document Summary

New working capital: the difference between current assets and current liabilities: working capital management. Size of the firm"s investment in current assets. Small inventory investments: reduces future sales levels. Ending st debt is equal to the cumulative deficit for the entire year. Simulation analysis: combines all the feature of scenario and sensitivity analysis variable all variables over a range of outcomes simultaneously: result is a probability distribution of financing needs. Carrying costs: costs that rise with increases in the level of investment in ca: opportunity cost associated with ca, rate of return on current assets is very low when compared to other assets. Shortage costs: costs that fall with increases in the level of investment in ca. Trading/ordering costs: the cost of placing an order for more cash (brokerage fee) or more inventory (production set up costs: costs related to lack of safety reserves: costs of lost sales, lost goodwill, and disruption of production schedules.