About 'managerial finance'|Finance 1

About 'managerial finance'|Finance 1

Ｍｅｍｏｒａｎｄｕｍ                ＴＯ:               Ｓｕｐｅｒｉｏｒ               Ｌｉｖｉｎｇ,               ＣＥＯ                ＦＲＯＭ:               Ｌｅｌａ               Ｋｅｅｌ                ＤＡＴＥ:               Ａｕｇｕｓｔ               23,               2011                ＳＵＢＪＥＣＴ:               Ｏｐｅｒａｔｉｏｎａｌ               Ｂｕｄｇｅｔ               Ｃｒｉｔｉｃａｌ               Ａｒｅａｓ                Ｉｎｔｒｏｄｕｃｔｉｏｎ                Ｃａｐｉｔａｌ               ｂｕｄｇｅｔｉｎｇ               ｉｓ               ｏｎｅ               ｏｆ               ｔｈｅ               ｍｏｓｔ               ｉｍｐｏｒｔａｎｔ               ｍｅａｓｕｒｅｓ               ａ               ｃｏｍｐａｎｙ               ｃａｎ               ｍａｋｅ               ｉｎ               ｒｅｌａｔｉｏｎ               ｔｏ               ｔｈｅｉｒ               ｆｉｎａｎｃｉａｌ               ｉｎｖｅｓｔｍｅｎｔ               ｄｅｃｉｓｉｏｎｓ. Ｔｈｒｏｕｇｈ               ｔｈｅ               ｃａｐｉｔａｌ               ｂｕｄｇｅｔｉｎｇ               ｐｒｏｃｅｓｓ               ｔｈｅ               ｆｉｎａｎｃｉａｌ               ｐｏｓｉｔｉｏｎ               ｏｆ               ａ               ｃｏｍｐａｎｙ               ｃａｎ               ｂｅ               ｄｅｔｅｒｍｉｎｅｄ               ｂｅｆｏｒｅ               ｍａｋｉｎｇ               ａｎｙ               ｉｎｖｅｓｔｍｅｎｔ               ｄｅｃｉｓｉｏｎｓ. Ｔｈｉｓ               ｃａｐｉｔａｌ               ｂｕｄｇｅｔｉｎｇ               ｐｒｏｃｅｓｓ               ｃａｎ               ｂｅ               ｐａｒｔｉｃｕｌａｒｌｙ               ｈｅｌｐｆｕｌ               ｔｏ               Ｓｕｐｅｒｉｏｒ               Ｌｉｖｉｎｇ               ｓｉｎｃｅ               ｅｎｏｒｍｏｕｓ               ａｍｏｕｎｔｓ               ｏｆ               ｆｕｎｄｓ               ｃｏｕｌｄ               ｂｅ               ｍｉｓｕｓｅｄ               ｉｆ               ｏｕｒ               ｃａｐｉｔａｌ               ｐｒｏｊｅｃｔ               ｔｕｒｎｓ               ｏｕｔ               ｔｏ               ｂｅ               ｕｎｐｒｏｆｉｔａｂｌｅ               ("Ｉｍｐｏｒｔａｎｃｅ               ｏｆ               Ｃａｐｉｔａｌ,"               ｎ.ｄ.). Ｗｉｔｈ               ｔｈａｔ               ｂｅｉｎｇ               ｓａｉｄ,               ｔｈｉｓ               ｐａｐｅｒ               ｗｉｌｌ               ｄｉｓｃｕｓｓ               ｈｏｗ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｃａｎ               ｉｍｐａｃｔ               ｔｈｅ               ｆｉｎａｎｃｅｓ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ,               ａｎｄ               ｗｈａｔ               ｃａｎ               ｂｅ               ｄｏｎｅ               ｔｏ               ｈａｎｄｌｅ               ｔｈｅ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｔｈａｔ               ｉｓ               ｃｏｍｉｎｇ               ｄｕｅ. Ｔｈｉｓ               ｐａｐｅｒ               ｗｉｌｌ               ａｌｓｏ               ｅｘｐｌａｉｎ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ,               ｉｔｓ               ｉｍｐｌｉｃａｔｉｏｎｓ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ,               ａｎｄ               ｗｈａｔ               ａ               ｇｏｏｄ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｉｓ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ. Ｉｎ               ａｄｄｉｔｉｏｎ,               ｉｔ               ｗｉｌｌ               ｂｅ               ｂｒｉｅｆｌｙ               ｄｅｓｃｒｉｂｅｄ               ｗｉｔｈｉｎ               ｔｈｉｓ               ｐａｐｅｒ               ｈｏｗ               ｔｈｅ               ｃｏｍｐａｎｙ               ｃａｎ               ｍａｋｅ               ｐｏｓｉｔｉｖｅ               ｃａｐｉｔａｌ               ｂｕｄｇｅｔｉｎｇ               ｄｅｃｉｓｉｏｎｓ               ｔｈａｔ               ｃａｎ               ｍａｋｅ               ａｎ               ｉｎｖｅｓｔｍｅｎｔ               ａ               ｓｕｃｃｅｓｓ.                Ｉｍｐａｃｔ               ｏｆ               Ｗｏｒｋｉｎｇ               Ｃａｐｉｔａｌ               ｏｎ               ｔｈｅ               Ｃｏｍｐａｎｙ'ｓ               Ｆｉｎａｎｃｅｓ                Ｉｎ               ｏｒｄｅｒ               ｔｏ               ｄｅｔｅｒｍｉｎｅ               ｈｏｗ               ｔｈｅ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｗｉｌｌ               ｈａｖｅ               ａｎ               ｅｆｆｅｃｔ               ｏｎ               ｏｕｒ               ｆｉｎａｎｃｅｓ               ｉｔ               ｍｕｓｔ               ｆｉｒｓｔ               ｂｅ               ｄｅｆｉｎｅｄ               ｗｈａｔ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｉｓ. Ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｉｓ               ｔｅｃｈｎｉｃａｌｌｙ               ｄｅｆｉｎｅｄ               ａｓ               ｔｈｅ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ               ｍｉｎｕｓ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｌｉａｂｉｌｉｔｉｅｓ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ. Ｉｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｄｉｄ               ｎｏｔ               ｈａｖｅ               ｓｕｆｆｉｃｉｅｎｔ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｔｈｅｎ               ｗｅ               ｗｏｕｌｄ               ｈａｖｅ               ａ               ｄｉｆｆｉｃｕｌｔ               ｔｉｍｅ               ｒｕｎｎｉｎｇ               ｔｈｅ               ｏｐｅｒａｔｉｏｎｓ               ｏｆ               ｔｈｅ               ｂｕｓｉｎｅｓｓ. Ｆｏｒ               ｉｎｓｔａｎｃｅ,               ｉｆ               ｗｅ               ｗｅｒｅ               ｉｎ               ｎｅｅｄ               ｏｆ               ｒａｗ               ｍａｔｅｒｉａｌｓ               ｂｕｔ               ｃｏｕｌｄ               ｎｏｔ               ｐｕｒｃｈａｓｅ               ｔｈｅｓｅ               ｒａｗ               ｍａｔｅｒｉａｌｓ               ｄｕｅ               ｔｏ               ｌａｃｋ               ｏｆ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｔｈｅｎ               ｔｈｉｓ               ｗｏｕｌｄ               ｍｅａｎ               ｗｅ               ｃｏｕｌｄ               ｎｏｔ               ｍａｎｕｆａｃｔｕｒｅ               ｏｕｒ               ｐｒｏｄｕｃｔｓ,               ａｎｄ               ａｓ               ａ               ｒｅｓｕｌｔ               ｎｏ               ｐｒｏｄｕｃｔｓ               ｗｏｕｌｄ               ｂｅ               ｓｏｌｄ. Ｔｈｉｓ               ｗｏｕｌｄ               ｉｍｐａｃｔ               ｏｕｒ               ｆｉｎａｎｃｅｓ               ｄｒａｍａｔｉｃａｌｌｙ               ｓｉｎｃｅ               ｏｕｒ               ｍａｉｎ               ｇｏａｌ               ｉｓ               ｔｏ               ｍａｎｕｆａｃｔｕｒｅ               ａｎｄ               ｓｅｌｌ               ｆｕｒｎｉｔｕｒｅ               ｐｒｏｄｕｃｔｓ               ｔｏ               ｃｏｎｓｕｍｅｒｓ               ｔｏ               ｋｅｅｐ               ｔｈｅ               ｂｕｓｉｎｅｓｓ               ｕｐ               ａｎｄ               ｒｕｎｎｉｎｇ               (ＣＴＵ               Ｏｎｌｉｎｅ,               2011).                Ｈｏｗ               ｔｈｅ               Ｃｏｍｐａｎｙ               ｃａｎ               Ｈａｎｄｌｅ               Ｓｈｏｒｔ-Ｔｅｒｍ               Ｄｅｂｔ                Ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｉｓ               ｖｉｔａｌ               ｔｏ               ｔｈｅ               ｄａｉｌｙ               ｏｐｅｒａｔｉｏｎｓ               ｏｆ               ｔｈｅ               ｏｒｇａｎｉｚａｔｉｏｎ. Ｉｔ               ｗｉｌｌ               ｂｅ               ｕｓｅｄ               ｔｏ               ｐａｙ               ｆｏｒ               ｍａｎｙ               ｔｈｉｎｇｓ               ｉｎｃｌｕｄｉｎｇ               ｉｎｖｅｎｔｏｒｙ,               ｕｔｉｌｉｔｉｅｓ,               ａｎｄ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔｓ               ｔｈａｔ               ｗｅ               ｍａｙ               ｉｎｃｕｒ               ｄｕｅ               ｔｏ               ｔｈｅ               ｏｐｅｒａｔｉｏｎｓ               ｏｆ               ｔｈｅ               ｂｕｓｉｎｅｓｓ. Ｔｈｅｓｅ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔｓ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｗｉｌｌ               ｔｙｐｉｃａｌｌｙ               ｂｅ               ｒｅｑｕｉｒｅｄ               ｔｏ               ｂｅ               ｐａｉｄ               ｂａｃｋ               ｗｉｔｈｉｎ               ａ               ｙｅａｒ               ｏｒ               ｌｅｓｓ. Ｉｎ               ｏｒｄｅｒ               ｔｏ               ｅｎｓｕｒｅ               ｔｈａｔ               ｔｈｅ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔｓ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ａｒｅ               ｐａｉｄ               ｂａｃｋ               ｗｉｔｈｉｎ               ｓｕｆｆｉｃｉｅｎｔ               ｔｉｍｅ               ａ               ｂｕｓｉｎｅｓｓ               ｐｌａｎ               ｆｏｒ               ｈａｎｄｌｉｎｇ               ｔｈｅｓｅ               ｏｂｌｉｇａｔｉｏｎｓ               ｓｈｏｕｌｄ               ｂｅ               ｐｕｔ               ｉｎｔｏ               ｐｌａｃｅ. Ｔｈｅ               ｂｕｓｉｎｅｓｓ               ｐｌａｎ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ               ｉｎ               ｈａｎｄｌｉｎｇ               ｏｕｒ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔ               ｓｈｏｕｌｄ               ｉｎｃｌｕｄｅ               ｔｈｒｅｅ               ｃｏｍｐｏｎｅｎｔｓ               ｗｈｉｃｈ               ａｒｅ               ａ               ｌｉｓｔ               ｏｆ               ｏｕｒ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ａｎｄ               ｌｉａｂｉｌｉｔｉｅｓ,               ａ               ｎｕｍｅｒｉｃａｌ               ｃｈａｒｔ               ｏｆ               ｔｈｅ               ｂｕｓｉｎｅｓｓ               ｉｎ               ｒｅｇａｒｄｓ               ｔｏ               ｐｒｏｆｉｔｓ               ａｎｄ               ｅｘｐｅｎｄｉｔｕｒｅｓ,               ａｎｄ               ａ               ｆｉｎａｎｃｉａｌ               ｃｈａｒｔ               ｓｈｏｕｌｄ               ｂｅ               ｉｎｃｌｕｄｅｄ               ｔｏ               ｓｈｏｗ               ｅｖｅｒｙ               ｔｒａｎｓａｃｔｉｏｎ               ｉｎ               ｗｈｉｃｈ               ｏｕｒ               ｄｉｓｐｏｓａｂｌｅ               ｉｎｃｏｍｅ               ｗａｓ               ｕｔｉｌｉｚｅｄ               ｆｏｒ. Ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｉｓ               ｔｅｃｈｎｉｃａｌｌｙ               ｄｅｆｉｎｅｄ               ａｓ               ｔｈｅ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ               ｍｉｎｕｓ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｌｉａｂｉｌｉｔｉｅｓ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ. Ｉｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｄｉｄ               ｎｏｔ               ｈａｖｅ               ｓｕｆｆｉｃｉｅｎｔ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｔｈｅｎ               ｗｅ               ｗｏｕｌｄ               ｈａｖｅ               ａ               ｄｉｆｆｉｃｕｌｔ               ｔｉｍｅ               ｒｕｎｎｉｎｇ               ｔｈｅ               ｏｐｅｒａｔｉｏｎｓ               ｏｆ               ｔｈｅ               ｂｕｓｉｎｅｓｓ. Ｆｏｒ               ｉｎｓｔａｎｃｅ,               ｉｆ               ｗｅ               ｗｅｒｅ               ｉｎ               ｎｅｅｄ               ｏｆ               ｒａｗ               ｍａｔｅｒｉａｌｓ               ｂｕｔ               ｃｏｕｌｄ               ｎｏｔ               ｐｕｒｃｈａｓｅ               ｔｈｅｓｅ               ｒａｗ               ｍａｔｅｒｉａｌｓ               ｄｕｅ               ｔｏ               ｌａｃｋ               ｏｆ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｔｈｅｎ               ｔｈｉｓ               ｗｏｕｌｄ               ｍｅａｎ               ｗｅ               ｃｏｕｌｄ               ｎｏｔ               ｍａｎｕｆａｃｔｕｒｅ               ｏｕｒ               ｐｒｏｄｕｃｔｓ,               ａｎｄ               ａｓ               ａ               ｒｅｓｕｌｔ               ｎｏ               ｐｒｏｄｕｃｔｓ               ｗｏｕｌｄ               ｂｅ               ｓｏｌｄ. Ｔｈｉｓ               ｗｏｕｌｄ               ｉｍｐａｃｔ               ｏｕｒ               ｆｉｎａｎｃｅｓ               ｄｒａｍａｔｉｃａｌｌｙ               ｓｉｎｃｅ               ｏｕｒ               ｍａｉｎ               ｇｏａｌ               ｉｓ               ｔｏ               ｍａｎｕｆａｃｔｕｒｅ               ａｎｄ               ｓｅｌｌ               ｆｕｒｎｉｔｕｒｅ               ｐｒｏｄｕｃｔｓ               ｔｏ               ｃｏｎｓｕｍｅｒｓ               ｔｏ               ｋｅｅｐ               ｔｈｅ               ｂｕｓｉｎｅｓｓ               ｕｐ               ａｎｄ               ｒｕｎｎｉｎｇ               (ＣＴＵ               Ｏｎｌｉｎｅ,               2011).                Ｉｎ               ａｄｄｉｔｉｏｎ,               ｔｈｅ               ｉｎ               ｏｒｄｅｒ               ｔｏ               ｐａｙ               ｂａｃｋ               ｔｈｅ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔ               ｏｂｌｉｇａｔｉｏｎｓ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｗｅ               ｍｕｓｔ               ｎｏｔ               ｔａｋｅ               ａｗａｙ               ｆｒｏｍ               ｏｕｒ               ｐｒｉｍａｒｙ               ｂｕｓｉｎｅｓｓ               ｏｐｅｒａｔｉｏｎｓ,               ａｎｄ               ｂｅｉｎｇ               ｌａｔｅ               ｏｎ               ａ               ｒｅｐａｙｍｅｎｔ               ｓｃｈｅｄｕｌｅ               ｗｉｌｌ               ｈａｒｍ               ｏｕｒ               ｆｕｔｕｒｅ               ｃｒｅｄｉｔ               ｈｉｓｔｏｒｙ               (Ｕｎｋｎｏｗｎ               Ａｕｔｈｏｒ,               ｎ.ｄ.).                Ｃｕｒｒｅｎｔ               Ｒａｔｉｏ               ａｎｄ               ｉｔｓ               Ｉｍｐｌｉｃａｔｉｏｎｓ               ｆｏｒ               ｔｈｅ               Ｃｏｍｐａｎｙ                Ｉｎ               ｏｒｄｅｒ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ               ｔｏ               ｍｏｎｉｔｏｒ               ｔｈｅ               ｐｏｓｉｔｉｏｎ               ｏｆ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｗｅ               ｈａｖｅ               ｏｕｒ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｍｕｓｔ               ｂｅ               ｄｅｔｅｒｍｉｎｅｄ. Ｗｅ               ｃａｎ               ｄｅｔｅｒｍｉｎｅ               ｔｈｉｓ               ｂｙ               ｄｉｖｉｄｉｎｇ               ｏｕｒ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ｂｙ               ｏｕｒ               ｃｕｒｒｅｎｔ               ｌｉａｂｉｌｉｔｉｅｓ               ｔｏ               ｃｏｍｅ               ｕｐ               ｗｉｔｈ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｏｆ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ. Ｔｈｅ               ｆｉｇｕｒｅ               ｒｅｌａｔｅｄ               ｔｏ               ｔｈｉｓ               ｗｉｌｌ               ｂｅ               ａｎ               ｉｎｄｉｃａｔｉｏｎ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ'ｓ               ａｂｉｌｉｔｙ               ｔｏ               ｍｅｅｔ               ｏｕｒ               ｓｈｏｒｔ-ｔｅｒｍ               ｏｂｌｉｇａｔｉｏｎｓ. Ｆｏｒ               ｉｎｓｔａｎｃｅ,               ｉｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ               ａ               ｔｏｔａｌ               ｏｆ               $12,000,000               ｉｎ               ｃｕｒｒｅｎｔ               ａｓｓｅｔｓ               ａｎｄ               ａ               ｔｏｔａｌ               ｏｆ               $9,000,000               ｉｎ               ｃｕｒｒｅｎｔ               ｌｉａｂｉｌｉｔｉｅｓ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｗｏｕｌｄ               ｂｅ               1.3. Ｔｈｉｓ               ｉｓ               ｇｏｏｄ               ｓｉｎｃｅ               ａ               ｇｅｎｅｒａｌ               ｒｕｌｅ               ｗｈｅｎ               ｃａｌｃｕｌａｔｉｎｇ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｉｓ               ｔｈａｔ               ａｎｙｔｈｉｎｇ               ｇｒｅａｔｅｒ               ｔｈａｎ               1               ｍｅａｎｓ               ｔｈａｔ               ｔｈｅ               ｃｏｍｐａｎｙ               ｈａｓ               ａｄｅｑｕａｔｅ               ｗｏｒｋｉｎｇ               ｃａｐｉｔａｌ. Ｗｉｔｈ               ｔｈａｔ               ｂｅｉｎｇ               ｓａｉｄ,               ｔｈｅ               1.3               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｏｆ               ｔｈｅ               ｃｏｍｐａｎｙ               ｗｏｕｌｄ               ｍｅａｎ               ｔｈａｔ               ｗｅ               ａｒｅ               ｉｎ               ｇｏｏｄ               ｆｉｎａｎｃｉａｌ               ｓｔａｎｄｉｎｇ               ｉｎ               ｒｅｇａｒｄｓ               ｔｏ               ｐａｙｉｎｇ               ｆｏｒ               ｏｕｒ               ｓｈｏｒｔ-ｔｅｒｍ               ｏｂｌｉｇａｔｉｏｎｓ               (ＣＴＵ               Ｏｎｌｉｎｅ,               2011).                Ｈｏｗ               ｔｈｅ               Ｃｏｍｐａｎｙ               ｃａｎ               Ｍａｋｅ               Ｐｏｓｉｔｉｖｅ               Ｃａｐｉｔａｌ               Ｂｕｄｇｅｔｉｎｇ               Ｄｅｃｉｓｉｏｎｓ                Ｔｈｅ               ｃｏｍｐａｎｙ               ｓｈｏｕｌｄ               ｅｘａｍｉｎｅ               ｔｈｅ               ｃａｐｉｔａｌ               ｂｕｄｇｅｔｉｎｇ               ｐｒｏｊｅｃｔ               ｔｈｅｙ               ａｒｅ               ｃｏｎｓｉｄｅｒｉｎｇ               ｏｎ               ｔｈｅ               ｃｒｉｔｅｒｉａ               ｏｆ               ｈｏｗ               ｍｕｃｈ               ｃａｓｈ               ｗｉｌｌ               ｂｅ               ｇｅｎｅｒａｔｅｄ               ｏｎ               ｔｈｅ               ｐｒｏｊｅｃｔ               ａｎｄ               ｈｏｗ               ｍｕｃｈ               ｐｒｏｆｉｔ               ｔｈｅ               ｐｒｏｊｅｃｔ               ｗｉｌｌ               ｂｒｉｎｇ               ｉｎ. Ｔｈｅ               Ｎｅｔ               Ｐｒｅｓｅｎｔ               Ｖａｌｕｅ               (ＮＰＶ)               ａｎｄ               ｔｈｅ               Ｍｏｄｉｆｉｅｄ               Ｉｎｔｅｒｎａｌ               Ｒａｔｅ               ｏｆ               Ｒｅｔｕｒｎ               (ＭＩＲＲ)               ｉｓ               ａ               ｍｅａｎｓ               ｆｏｒ               ｔｈｅ               ｃｏｍｐａｎｙ               ｔｏ               ｄｅｔｅｒｍｉｎｅ               ｗｈｅｔｈｅｒ               ｔｏ               ａｃｃｅｐｔ               ｏｒ               ｒｅｊｅｃｔ               ｔｈｅ               ｐｒｏｊｅｃｔ. Ｔｈｅ               ＮＰＶ               ｉｓ               ａ               ｍｅａｎｓ               ｏｆ               ｄｅｔｅｒｍｉｎｉｎｇ               ｈｏｗ               ｍｕｃｈ               ｃａｓｈ               ｔｈｅ               ｐｒｏｊｅｃｔ               ｗｉｌｌ               ｇｅｎｅｒａｔｅ               ａｎｄ               ｔｈｅ               ＭＩＲＲ               ｉｓ               ａ               ｍｅａｎｓ               ｆｏｒ               ｍｅａｓｕｒｉｎｇ               ｔｈｅ               ｒｅｔｕｒｎ               ｏｎ               ｔｈｅ               ｉｎｖｅｓｔｍｅｎｔ. Ｗｉｔｈ               ｔｈａｔ               ｂｅｉｎｇ               ｓａｉｄ,               ａ               ｐｒｏｊｅｃｔ               ｔｈａｔ               ｈａｓ               ａ               ｐｏｓｉｔｉｖｅ               ＮＰＶ               ａｎｄ               ａ               ｈｉｇｈｅｒ               ＭＩＲＲ               ｉｓ               ｏｎｅ               ｔｈａｔ               ｗｉｌｌ               ｔｙｐｉｃａｌｌｙ               ｂｅ               ｃｈｏｓｅｎ               ｒａｔｈｅｒ               ｔｈａｎ               ｔｈｏｓｅ               ｔｈａｔ               ｈａｖｅ               ａ               ｌｏｗｅｒ               ＭＩＲＲ               (ＣＴＵ               Ｏｎｌｉｎｅ,               2011).                Ｃｏｎｃｌｕｓｉｏｎ                Ｔｈｅ               ｃｏｍｐａｎｙ               ｓｈｏｕｌｄ               ｉｍｐｌｅｍｅｎｔ               ａ               ｐｌａｎ               ｆｏｒ               ｍａｎａｇｉｎｇ               ｏｕｒ               ｓｈｏｒｔ-ｔｅｒｍ               ｏｂｌｉｇａｔｉｏｎｓ               ｓｏ               ｔｈａｔ               ｗｅ               ａｒｅ               ｎｏｔ               ｓｕｄｄｅｎｌｙ               ｏｖｅｒｗｈｅｌｍｅｄ               ｗｉｔｈ               ｄｅｂｔ. Ｅａｃｈ               ｐｒｏｊｅｃｔ               ｔｈｅ               ｃｏｍｐａｎｙ               ｉｓ               ｃｏｎｓｉｄｅｒｉｎｇ               ｗｉｌｌ               ａｓｓｕｍｅ               ｄｉｆｆｅｒｅｎｔ               ｒｉｓｋ               ｌｅｖｅｌｓ               ｉｎ               ｒｅｇａｒｄｓ               ｔｏ               ｆｉｎａｎｃｉｎｇ               ｒｅｑｕｉｒｅｍｅｎｔｓ. Ｈｏｗｅｖｅｒ,               ａｓ               ｌｏｎｇ               ａｓ               ｔｈｅ               ｐｒｏｊｅｃｔ               ｂｅｉｎｇ               ｃｏｎｓｉｄｅｒｅｄ               ｉｓ               ｐｒｏｐｅｒｌｙ               ｍａｎａｇｅｄ               ａｎｄ               ｉｔ               ｉｓ               ｅｎｓｕｒｅｄ               ｔｈａｔ               ｗｅ               ａｒｅ               ｎｏｔ               ｔａｋｉｎｇ               ｏｎ               ｍｏｒｅ               ｔｈａｎ               ｗｅ               ｃａｎ               ｈａｎｄｌｅ               ｂｙ               ｄｅｔｅｒｍｉｎｉｎｇ               ｔｈａｔ               ｔｈｅ               ｃｕｒｒｅｎｔ               ｒａｔｉｏ               ｏｆ               ｏｕｒ               ａｓｓｅｔｓ               ａｎｄ               ｌｉａｂｉｌｉｔｉｅｓ               ｉｓ               ｇｒｅａｔｅｒ               ｔｈａｎ               1,               ｔｈｅｎ               ｗｅ               ｃａｎ               ｓｕｃｃｅｓｓｆｕｌｌｙ               ｆｉｎａｎｃｅ               ｔｈｅ               ｃａｐｉｔａｌ               ｐｒｏｊｅｃｔ               ｓｏ               ｔｈａｔ               ｔｈｅ               ｃｏｍｐａｎｙ               ｃａｎ               ｃｏｎｔｉｎｕｅ               ｔｏ               ｏｐｅｒａｔｅ               ａｎｄ               ｂｒｉｎｇ               ｉｎ               ｒｅｖｅｎｕｅ               (ＣＴＵ               Ｏｎｌｉｎｅ,               2011).                Ｒｅｆｅｒｅｎｃｅｓ                ＣＴＵ               Ｏｎｌｉｎｅ. (2011). Ａｐｐｌｉｅｄ               Ｍａｎａｇｅｒｉａｌ               Ｆｉｎａｎｃｅ. Ｐｈａｓｅ               1               ｃｏｕｒｓｅ               ｍａｔｅｒｉａｌｓ               [ｔｅｘｔ]. Ｒｅｔｒｉｅｖｅｄ               ｆｒｏｍ               ｈｔｔｐｓ://ｃａｍｐｕｓ.ｃｔｕｏｎｌｉｎｅ.ｅｄｕ/ｐａｇｅｓ/ＭａｉｎＦｒａｍｅ.ａｓｐｘ?ＣｏｎｔｅｎｔＦｒａｍｅ=/Ｈｏｍｅ/Ｐａｇｅｓ/Ｄｅｆａｕｌｔ.ａｓｐｘ                Ｉｍｐｏｒｔａｎｃｅ               ｏｆ               Ｃａｐｉｔａｌ               Ｂｕｄｇｅｔｉｎｇ. (ｎ.ｄ.)               Ｒｅｔｒｉｅｖｅｄ               ｆｒｏｍ               ｈｔｔｐ://ｗｗｗ.ｆｉｎｗｅｂ.ｃｏｍ/ｆｉｎａｎｃｉａｌ-ｐｌａｎｎｉｎｇ/ｔｈｅ-ｉｍｐｏｒｔａｎｃｅ-ｏｆ-ｃａｐｉｔａｌ-ｂｕｄｇｅｔｉｎｇ.ｈｔｍｌ                Ｕｎｋｎｏｗｎ               Ａｕｔｈｏｒ. (ｎ.ｄ.). Ｈｏｗ               ｔｏ               ｈａｎｄｌｅ               ｓｈｏｒｔ-ｔｅｒｍ               ｄｅｂｔ               ｗｉｔｈｉｎ               ａ               ｃｏｒｐｏｒａｔｉｏｎ. Ｒｅｔｒｉｅｖｅｄ               ｆｒｏｍ               ｈｔｔｐ://ｗｗｗ.ｅｈｏｗ.ｃｏ.ｕｋ/ｈｏｗ_6868924_ｈａｎｄｌｅ-ｓｈｏｒｔ_ｔｅｒｍ-ｄｅｂｔ-ｗｉｔｈｉｎ-ｃｏｒｐｏｒａｔｉｏｎ.ｈｔｍｌ

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