Financial managers often view the balances their companies have in Current Assets and Current Liabilities the result of an investment decision. Discuss why these balances can be viewed as "investment" decisions.
2. Two companies manufacture can openers. Relevant data follows:
Old School Manufacturing, Inc.Hi Tech Manufacturing, Inc.Degree of Operating Leverage2.25.7Degree of Financial Leverage1.53.3
Which of these companies is more at risk? Why?
Which of these companies has a lower break-even point? Why?
Discuss what advantages a labor intensive company has over a capital intensive company.
Discuss the advantages a capital intensive company has compared to a labor intensive company.
Discuss how "offshoring" has impacted the leverage question.