Response to Week 4 Discussion Number

Responseto Week 4 Discussion

Number:

ResponseTo Week 4 Discussion

Section1

  1. Major Components Of A Working Capital Management Strategy

Workingcapital management is managerial accounting strategy that its mainelement is to focus on preserving proficient levels of both theconstituents of working capital, which entails the currentliabilities, and current assets. Business organizations must measurerisks, develop, and then implement strategies for maintaining apositive cash flow within the business. This is what is referred as‘workingcapital management strategy’. The two main components of workingcapital management strategy are CurrentAssets(items that can be turned into cash quickly) and CurrentLiabilities(liabilities incurred during business operations) (Bhattacharya,2009).With reference to the student’s response given, Idisagreewith his/her explanation of the two major elements of working capitalmanagement strategy.

  1. Comparison between Aggressive and Conservative Asset Mix Strategies (Goals, Liquidity, and Risk)

Aggressiveand conservative asset allocation strategies have a range ofsimilarities and differences, which needs to be well identifiedwithin a business. I agree with the student’s response to thesecond question on comparison between aggressive and conservativeasset mix strategies. In reference to the aggressive asset location,it prioritizes on high volatile in investment which is denoted byexpectation of big gains however, diversity is key in order toreduce risks of taking in a big negative hit which is highlypossible. In contrast to conservative case, the mix of investment isless volatile and the risks are lesser in terms of magnitude (Darst,2008).

Section2

  1. Major Components Of A Working Capital Management Strategy

Thetwo major and essential elements of working capital managementstrategy are the current assets and current liabilities. Businessorganizations must measure risks, develop, and then implementstrategies for maintaining a positive cash flow within the business.This is what is referred as ‘workingcapital management strategy’ (Bhattacharya,2009).With reference to the students response I agreeto her view about the two major components of a working capitalstrategy.

  1. Conservative Vs Aggressive Asset Mix Strategies (Goals, Liquidity And Risk)

Withreference to the student’s response to this question, I disagreewith his approach to the question. He/she hasn’t compares the twoterms in question in terms of their goals, liquidity and risk. Interms of goals, the aggressive aspect is associated with massivereturns, while in terms of risk, the approach is associated withhigher risk that the conservative. Moreover, the conservativeapproach is associated with controlled returns (Darst,2008).In terms of liquidity, the aggressive has a lower extent in which itcan be bought or sold in the market compared to conservative assetmix strategy.

References

Bhattacharya,H. (2009).&nbspWorkingcapital management: Strategies and techniques.New Delhi:

Prentice-Hallof India.

Darst,D. M. (2008).&nbspTheart of asset allocation: Principles and investment strategies for any

market.New York: McGraw-Hill.

Related Posts

© All Right Reserved