Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Vale Corporation sells Product MAGNETITE and Product HEMATITE , the sales of both products are occurring evenly throughout the year. Product MAGNETITE The annual demand
Vale Corporation sells Product MAGNETITEand Product HEMATITE, the sales of both products are occurring evenly throughout the year. Product MAGNETITE The annual demand for it, is 600,000 units and an order for new inventory is placed each month. Each order costs OMR45 to place. The cost of holding Product MAGNETITE in inventory is 100 baisa per unit per year. Buffer inventory equal to 40% of one months sales is maintained. Product HEMATITE The annual demand for it, is 856,000 units per year and Vale Corporation buys this product at OMR1 per unit on 60 days credit. The supplier has offered an early settlement discount of 1% for settlement of invoices within 30 days. Other information Vale Corporation finances working capital with short-term finance costing 7% per year. Assume that there are 365 days in each year. Required: Identify the objectives of working capital management and discuss the central role of working capital management in financial management in the light of above scenario.(approximately in 200 words)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started