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QUESTION 1 a. Working capital management is very relevant in positioning every company within the local and global spectrum. The three types of working capital polices (aggressive, moderate and conservative policies) have varied impact on the profitability; liquidity and competitive positions of the organisation. Required: In the nimble of the above explain and demonstrate the impact of each of the policies below on profitability; liquidity and competitiveness: i) Aggressive Working Capital Management; i) Moderate Working Capital; iii) Conservative Working Capital Management; b. Phibe-Evelyn Itd. has annual credit sales of GHe2,000,000. Credit customers take 90 days to pay. Bad debts are 4% of sales. The company finances its trade receivables with a bank overdraft, on which interest is payable at an annual rate of 30%. A factor has offered to take over administration of the receivable's ledger and collections for a fee of 5% of the credit sales. This will be a non-recourse factoring service. It has also guaranteed to reduce the payment period to 60 days. It will provide finance for 80% of the trade receivables, at an interest cost of 16% per year. Phibe-Evelyn Itd. estimates that by using the factor, it will save administration costs of GHe 16,000 per year. Required: What would be the effect on annual profits if Phibe-Evelyn Itd. decides to use the factor's services? (Assume a 365-day year). c. Holding stock and sometimes over-stocking come at a great cost to a company. Not withstanding these costs, it is sometimes necessary to hold stock or even over stock for the smooth running of the company. Required: i) Explain any TWO (2) reasons for holding stock. ii) State and explain THREE (3) costs associated with holding stocks