FMF9

Syllabus C3. Working Capital Funding Strategies 7 / 7

a) Calculate the level of working capital investment in current assets and discuss the key factors determining this level, including:
i) the length of the working capital cycle and terms of trade
ii) an organisation’s policy on the level of investment in current assets
iii) the industry in which the organisation operates
b) Describe and discuss the key factors in determining working capital funding strategies, including:
i) the distinction between permanent and fluctuating current assets
ii) the relative cost and risk of short term and long-term finance
iii) the matching principle
iv) the relative costs and benefits of aggressive, conservative and matching funding policies
v) management attitudes to risk, previous funding decisions and organisation size
Working Capital Funding Strategies