Investment in working capital means to invest money in liquid and current assets. We all know that working capital is important, if we want to operate ourfixed assets more efficiently. Like investment in fixed capital decision, investment in working capital decision is also important. In working capital investment, we keep our some money in cash. We also invest our some money in the form of inventory, debtors and short term securities. Value of these investment must be more than our current liabilities.Now, important question is, "How much excess amount should be invested?" Our current assets are $ 10000 and our current liabilities are $ 7000. Our investment in working capital is $ 3000. Now, question is, whether $ 3000 investment is sufficient or not.To know this answer, we have to study many factors which affect our investment in working capital.
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