Sample Essay

There are two types of asset requirements for Wave Satellite throughout the year which are current and fixed assets. The level of fixed assets for the previous year as highlighted in the table is $500,000 throughout the year whereas the current assets of the firm are variable throughout the year. The assets which are necessary for carrying out operations and do not change with the passage of time are classified as permanent assets and the assets which fluctuate during a time period are classified as temporary assets.

The funds necessary to finance permanent assets are referred to as permanent whereas the funds necessary to finance temporary assets are termed as temporary. The average permanent funds required for Wave Satellite can be calculated by classifying the total assets into permanent and temporary classes (Bhalla 2005). The table indicates that the lowest level of current assets required in a month for current assets is $25,000 in January. This lowest level will be used as the minimum amount of current assets required for operations in a particular month. The fixed assets are of a permanent nature and therefore would be necessary for each month. The permanent funds required for each month can be calculated by adding the minimum level of current assets and fixed assets necessary for continuing business operations.

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