Keeping MMF’s operating cash balance as close to

zero as possible always maximizes long-term value.

As MMF grows and opens additional locations, its minimum ongoing cash, inventory,

and receivables balances rise. What does this imply?

MMF pays $20,000 cash to buy inventory. Before any inventory is sold and

ignoring all other activity, what happens to total current assets?

Using short-term loans for permanent asset needs

eliminates the risk that MMF will lose access to financing.

MMF sells inventory on credit for more than its recorded cost to create an accounts receivable and reduce inventory on its balance sheet. Ignoring all other activity, what is the immediate effect on total current assets?

MMF is looking to finance $600,000 of permanent current assets and fixed assets, and $100,000 in temporary current assets for a new one-year branded water bottle promotion. Which of the financing options below would be considered the most aggressive financing approach?

Short-term decisions about working capital have no impact on whether a company survives in the long-run.

Companies that manage their current assets well can create a competitive advantage that increases long-term company value.

MMF purchases extra water bottles for a temporary three-month promotion and

expects inventory to return to its normal level afterward. Which financing best

matches this asset need?

MMF always needs a minimum supply of sports drinks, even though

individual bottles are sold and replaced. This minimum inventory level is best

classified as: