KEY TERMS Define each of the following terms:

a. Working capital; net working capital; net operating working capital

b. Relaxed investment policy; restricted investment policy; moderate investment policy

c. Permanent current assets; temporary current assets

d. Current assets financing policy; maturity matching (self-liquidating) approach

e. Cash conversion cycle (CCC); inventory conversion period; average collection period;

payables deferral period

f. Cash budget; target cash balance g. Lockbox; account receivable h. Credit policy; credit period; discounts; credit standards; collection policy; credit terms;

credit score i. Trade credit; free trade credit; costly trade credit j. Promissory note; line of credit; revolving credit agreement k. Prime rate; regular, or simple interest; add-on interest l. Commercial paper; accruals; spontaneous funds m. Secured loan AppendixL01