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1. Which of the following is not a common way of looking at working capital?
Working capital relates to trade receivables, trade payables and inventory
Working capital is equal to current assets minus current liabilities
Working capital reflects the value of all of your assets that are in use (“at work”) in the business
2. Given the information below, what formula can we use to calculate our Accounts Receivable?
Revenue x Days receivable / Days in period
Opening accounts receivable
Opening accounts receivables + Revenue – Cash receipts
3. Which of the following is not an assumption that we make to use our working capital formulae?
Number of days receivable has to be less than 365
No bad debts / write-offs
Number of days receivable has to be less than the number of days in the period
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