Money makes the wheels business run smoothly

2.Give a brief explanation on the business and financial environment of the company selected.

Determine the selected companies working capital, if the Inventory is having 3 months holding periods and Receivable 4 month holding period and  account payable 3 month lag period.

Answers:

1.The company selected by us is Spar Inc. Spar Inc. is a world leader in merchandising retails and has its operations in six continents across the world. It was founded in 1967 and ventured into retail merchandising after acquiring Gelco (SPAR, 2017). It is also a leader in merchandising related to home entertainment. It was the first for implementing mobile handheld technology in retail merchandising industry.

Total Assets of the Company: R27, 355.8 million

Total Liabilities of the Company: R27, 355.8 million

Net Working Capital of the Company

We get Net Working Capital after deducting current liabilities from current assets. It is used for determining the availability of liquid assets of the company. Current liabilities are short term liabilities falling due within 12 months period. It is a cash flow formula (Baños et.al, (2014). The formula is:

Enqvist, J., Graham, M., & Nikkinen, J. (2014). The impact of working capital management on

firm profitability in different business cycles: Evidence from Finland. Research inInternational Business and Finance, 32, 36-49.