QUESTIONS (16-1) i. Define each of the following terms: a. Working capital, networking capital, net operating working capital b. Current asset usage policies related policy restricted policy, and moderate policy c. Permanent operating current assets temporary operating current assets d. Current asset financing policies maturity matching aggressive, and conservative e Inventory conversion periodaverage collection period, payables deferral period: cash conversion cycle 1. Cash budget, target cash balance & Transactions balances compensating balances precautionary balances h. Trade (cash) discounts Credit policy, credit period; credit standards: collection policy, cash discounts Account receivable, days sales outstanding: aging schedule k Accruals; trade credit 1. Stretching accounts payable; free trade credit; costly trade credit m. Promissory note, line of credit; revolving credit agreement n. Commercial paper; secured loan What are the two principal reasons for holding cash? Can a firm estimate its target cash balance by summing the cash held to satisfy each of the two reasons? Is it true that, when one firm sells to another on credit, the seller records the transaction as an account receivable while the buyer records it as an account payable and that, disre- garding discounts, the receivable typically exceeds the payable by the amount of profit on the sale? What are the four elements of a firm's credit policy? To what extent can firms set their own credit policies as opposed to accepting policies that are dictated by its competitors? (16-2) (16-3) (16-4)