Discussion Question(s) #1 Week # 3
How would you define working capital? What could happen if an organization neglected to manage its working capital? What working capital techniques would you recommend for your organization? Why? Working capital refers to the short term decisions relating to financing. If the working capital is neglected in any way, it can cause a company to go bankrupt. If this occurs, it means that employees will not get paid and suppliers will not get the proper funding for the supplies that were already ordered. Management of the working capital has to be strict. Policies will need to be put into place where everything is managed correctly. When there is a fault in the management of the policy, workers should come together and implement a plan that will allow for the decisions that were previously made to be taken into effect.
Discussion Question(s) #2 Week # 3
What is meant by capital planning? Why is IRR important to an organization? Why is NPV important to a project? How would you select from multiple projects presented to your organization? Capital Planning is a set of plans that a company uses in order to determine if long-term assets are worth their value. It is also a form of budgeting. IRR is important because the higher it is, the more a certain project can be considered. Every organization have plans for certain projects and the IRR is considered when trying to pursue a plan. The NPV shows which asset is profitable. In addition, it shows the dollar amount of the asset. If there are multiple projects to be considered, then the organization will need to check certain factors before making the final decision. The process of making a decision consists of checking the IRR to see how high it is, if the capital planning can work with it, and whether the NPV matches the work of the IRR. Both the IRR and the NPV have to work together in order for the selection to be made from multiple projects.
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