All items classified as current assets form part of the working capital of the business.

Having an adequate working capital enables the business to maintain a good credit standing

A business that has an insufficient or inadequate working capital can hardly replenish its inventories.

The current operating expenses of the business are paid promptly when the working capital of the business is usually inadequate.

All types of businesses should have the same level of working capital.

Assets that are used beyond the normal operating cycle of the business are considered current assets.

Practices in the industry influence the level of current assets that must be maintained by companies in that sector.

In high level of working capital policy, the business maintain a large amount of current assets.

A business that has a high level of working capital is expected to have a high return on investment.

Having excessive current assets provides more advantages to the operations of the business.

The expected return on investment is usually higher when the business adopts a conservative current asset investment policy.

The level of permanent current assets fluctuates over time based on the seasonal or cyclical demands for the product.

In an aggressive investment policy, the risk of financial failure is higher than in a conservative investment policy.

Spontaneous debts are usually classified as current or short-term liabilities that arise from borrowings.

In an aggressive investment policy, the business finances its temporary current assets with short-term, non-spontaneous debts.

In conservative investment policy, the business usually has a high level of current assets in relation to sales, and at the same time, has low current liabilities relative to total assets.

The primary concern of a well-defined working capital policy is to determine the trade-off between liquidity risk and profitability.

In an aggressive working capital policy, the business has a high ratio of short-term debt to long-term sources of fund.

In an ideal working capital situation, fixed assets and permanent current assets are financed by short-term debts.