Question

_________ term investment decision are concerned with the decisions about the levels of cash, inventories and debtors.

• A. Long
• B. Short
• C. Medium
• D. Both a and c

Answer 1

Answer: (B)

Short

The investment made in the current assets or short term assets is termed as Working Capital Management. The working capital management deals with the management of current assets that are highly liquid in nature.

The investment decision in short-term assets is crucial for an organization as a short term survival is necessary for the long-term success. Through working capital management, a firm tries to maintain a trade-off between the profitability and the liquidity.

Short-term investments are part of the account in the current assets section of a company's balance sheet. This account contains any investments that a company has made that is expected to be converted into cash within one year.