MODULE 6 - WORKING CAPITAL MANAGEMENT. Answer the following questions in a separate answer sheets 1. Define and contrast the terms working capital and networking capital. 2. Discuss the risk-return relationship involved in the firm's asset-investment decisions as that relationship pertains to its working-capital management. 3. What advantages and disadvantages are generally associated with the use of short-term debt? Discuss. 4. Explain what is meant by the statement The use of current liabilities as opposed to long- term debt subjects the firm to a greater risk of illiquidity." 5. Define the hedging principle. How can this principle be used in the management of working capital? 6. Define the following terms: a) Permanent asset investments b) Temporary asset investments c) Permanent sources of financing d) Temporary sources of financing e) Spontaneous sources of financing Page 6 of 6