The basic EOQ formula is used to minimize the total of inventory carrying and ordering costs. The basic EOQ equals the square root of a fraction consisting of a numerator equal to the product of twice the unit periodic demand and the variable cost per order and a denominator equal to the unit periodic carrying cost.

Working capital equals current assets minus current liabilities. The acid-test ratio equals quick assets current assets - inventory - prepaid expenses) divided by current liabilities.
Inventory a current asset) turnover equals cost of goods sold divided by divided inventory. The average collection period number of days' sales in accounts receivable, a current asset) equals the number of days in a year divided by the accounts receivable turnover net credit sales / average receivables). The foregoing are some of the many ratios that can be used to evaluate working capital management.

A finance lease is one in which the risks and rewards of ownership are transferred to the lessee. For accounting purposes, the lessee treats a finance lease as similar to the purchase of an asset capitalized at the fair value of the leased asset or, if lower the present value of the minimum lease payments. The lessee's minimum lease payments include the required payments, excluding contingent rent and executor costing taxes and insurance), plus any amounts guaranteed by the lessee or a related party. If a bargain purchase option exists, however, minimum lease payments equal the required payments plus the amount of the option. If the present value of the minimum lease payments calculated without guaranteed amounts or a bargain purchase option) is substantially all of the asset's fair value, the lease normally is accounted for as a finance lease. Given that the executor costs associated with the lease are to be paid by the lesser.
A portion of the lease rental price is for those costs. not for the asset. Consequently the annual minimum lease payment equals the annual payment minus the executory costs. or US $3,500$4,000 yearly rental - $500). The present value of the minimum lease payments is therefore US $9,590 $3,500 x 2.74), which is substantially all of the fair value of the asset. Thus the lease should be capitalized. The appropriate amount of the initial asset value is the present value of the minimum lease payments calculated above.