Wilson electric company a manufacturer of various types of

Assignment Help Accounting Basics

Reference no: EM13603393

Wilson Electric Company, a manufacturer of various types of electrical equipment, is examining its working capital investment policy for next year. Projected fixed assets and current liabilities are $20 million and $18 million, respectively. Sales and EBIT are partially a function of the company's investment in working capital-particularly its investment in inventories and receivables. Wilson is considering the following three different working capital investment policies: Investment in Working Capital Current Assets Projected Sales EBIT Investment (in Millions (in Millions (in Millions Policy of Dollars) of Dollars) of Dollars) Aggressive (small investment $28 $59 $5.9 in current assets) Moderate (moderate investment 30 60 6.0 in current assets) Conservative (large investment 32 61 6.1 in current assets) a. Determine the following for each of the working capital investment policies:

i. Rate of return on total assets (that is, EBIT/total assets)

ii. Net working capital position

iii. Current ratio b. Describe the profitability versus risk trade-offs of these three policies.

Reference no: EM13603393

Questions Cloud

Given the independent random variables x and y with : given the independent random variables x and y with respective probability mass functionspx 0 12px2 12py1 16py2

An astronaut on a small planet wishes to measure the local : an astronaut on a small planet wishes to measure the local value of the free-fall acceleration by timing pulses

Determine the vertical velocity vo with which a ball must : determine the vertical velocity vo with which a ball must be thrown in order for the time of flight to the bottom of

A six-sigma black belt quality engineer found that in a : a six-sigma black belt quality engineer found that in a random sampl of 140 printed circuit boards 18 are defective due

Wilson electric company a manufacturer of various types of : wilson electric company a manufacturer of various types of electrical equipment is examining its working capital

If the velocity v of a paticle moving along a straight : if the velocity v of a paticle moving along a straight line decreases linearly with its displacement from 20ms to a

Miles ltd has two divisions jericho and jackson each of : miles ltd has two divisions jericho and jackson. each of these is regarded as a separate cash-generating unit. at 31

The following are the numbers of defective parts produced : the following are the numbers of defective parts produced in a shift by 10 workers before and after going through a

Is the buoyant force on an object that is attached to a : is the buoyant force on an object that is attached to a light sting and submerged completely in water the same as the

User Account

All Pages