A Risk-Return Analysis of a Firm's Working-Capital Position
作者:
JamesC. Van Horne,
期刊:
The Engineering Economist
(Taylor Available online 1969)
卷期:
Volume 14,
issue 2
页码: 71-89
ISSN:0013-791X
年代: 1969
DOI:10.1080/00137916908928796
出版商: Taylor & Francis Group
数据来源: Taylor
摘要:
In this paper, a method is proposed by which management is able to analyze the risk-return tradeoff for various levels of liquid assets for the firm and for different maturity compositions of its debt. Together, these factors determine its working-capital position. Certain probability concepts are employed; and information is provided about the risk of cash insolvency for alternative strategies. In addition, the opportunity costs of these strategies are determined. With the framework proposed, more rational working-capital decisions are possible. The firm is able to achieve a working-capital position that provides the appropriate margin of safety in relation to the cost involved in attaining that position
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