MOG 1012 : Ch6.2 - WC & Financing Decision

Firms with predictable cash-flow patterns should assume relatively low levels of risk.

The more short-term financing relative to long-term financing, the riskier the financial structure.

Immediate access to capital markets allows greater risk-taking capability.

Liquidating current assets is like liquidating fixed assets since they have lives greater than one year.

The expected value is the sum of the probabilities of all expected events.

During tight money periods, short-term financing may be difficult to find.

One of the primary benefits of implementing supply chain management is reducing inventory on hand.

Firms with highly volatile and perishable inventory should assume relatively low levels of risk.

Heavy risk exposure due to short-term borrowing can be compensated for by carrying illiquid assets.

Heavy use of long-term debt will allow a firm to carry less liquid, more profitable assets.