A2: Working CapitalAn imperative concept for any business is how to best adjust its assets for growth. This concept is called working capital. Net working capital is the company's current assets minus liabilities and gross working capital is the company's total current assets (Investopedia, 2013e). Net working capital demonstrates a company's ability to repay its short-term debts using its current assets. The working capital required depends on the size of the business, and a decreasing or too high amount may be a sign that assets are not being used prudently or that there are excess liabilities. With strong working capital, a business can determine where it can grow and best take future risks. This all leads to the concept of the operating cycle, or the time it takes to transform assets into useful resources and then back into assets again. Below is Competition Bikes' net working capital, calculated using the net assets - liabilities = net working capital model. : Year Assets Liabilities Working capital Six $1,029,303 $105,080 $924,223 Seven $1,353,044 $233,700 $1,119,344 Eight $1,575,831 $300,200 $1,257,631 The amount of working capital for competition bikes has increased steadily every year. Because of the way they have allocated their assets and liabilities, they are not benefiting in the best possible way. Their cash and cash equivalents increased by more than $300,000 between years seven and eight. The excess money, however, was not used to invest in new product ideas or pay debts, which hurt their working capital. Their accounts payable also increased by $65,300 during the same period, showing that they are not paying off their debts when they have the money to do so. They suffer...... middle of paper ...... associated with non-compliance with the law, such as fines or even closure, it is possible. Ensuring that their management is aware of the legal aspects and that they comply with the laws will in turn contribute to shareholders being much more united and the financial future of the company being much stronger. ConclusionIn conclusion, Competition Bikes is a young company that has had to deal with difficult issues such as expansion, revenue losses, product changes, and a poor economy. Although the company has worked to make adjustments and grow in these areas, it has also faced issues related to its internal business processes, finances and non-compliance with the law. By making the necessary changes to these problem areas and complying with federal law, they have a good chance of becoming a strong, competitive and profitable business..