Financial Accounting: Assets—Working Capital, Inventory LCM, and Fair Value Measurement

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Phegqbt

Business Finance

Description

Regarding the components of working capital: In the following debate, take a position of an investor who wants to evaluate the liquidity of a company. As the investor, identify one of the two positions you are taking and defend and support it with at least two peer-reviewed sources:

Position #1: Argue for including inventory, prepaids, and deferrals in working capital.

Position #2: Argue against including inventory, prepaids, and deferrals in working capital.

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Explanation & Answer

Attached.

Running Head: WORKING CAPITAL

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Working Capital
Name
Instructor
Institutional Affiliation
Date

WORKING CAPITAL

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Position #1: Argue for including inventory, prepaids, and deferrals in working capital.
Working capital is an integral part towards ensuring the smooth running of organization
economic activities (Aktas, Croci, & Petmezas, 2015). Working capital is obtained by deducting
current liabilities from the current assets (working capital=current assets-current liabilities).
From the formula itself, it is impor...

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