Financing current assets decision in working capital management: An evaluation

Abstract

The investment in current assets is imperative for the day-to-day operations of a business concern. It determines the liquidity and the profitability of the business concern. Financing current assets is a challenging task but this is one of the significant aspects of working capital management. It involves a crucial financial decision. There are various approaches available in determining an appropriate mix of financing current assets, but none of the approaches is completely satisfactory and acceptable. The present paper focuses on the real corporate world practices regarding financing current assets decision in working capital management. The main aim is to enlighten the shareholders, creditors, investors, bankers, prospective entrepreneurs, students and academicians relating to financing current assets decision and its implications. The study would reveal how far, the profit available and risk associated with the financing mix and a trade-off between risk and return will result in an acceptable financing strategy for most of business concerns.