Investing Lesson 3

Quiz: How to Analyze a Balance Sheet

Explanation of $1,000 Question

Boeing manufacturers airplanes, which requires a lot of capital and time.  Customers normally place orders months, or even years ahead of payment.  If Boeing needed to raise cash, it would have a very hard time selling its inventory in the short term.

Companies such as McDonalds, Dell, and Coca-Cola on the other hand, have products which can be sold far more quickly.  Raising cash in the short term is not as difficult for these businesses, so they require much less working capital.

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