5.7 Working Capital Policies

Working capital policies involves two decisions, namely the optimal level of investment in current assets and how these should be financed. Working capital policies examine the various ways in which the investment in current assets can be done, without negatively impacting on the return on investment of the firm. These policies are mainly grouped into three categories namely; the conservative, the moderate and the aggressive policy. There is a relationship between the level of working capital relative to total asset investments and risk. The appropriate level of working capital usually lies between the two extremes of aggressive and conservative policies. 

It’s necessary to point out here, at the very beginning of this text, that every manager has some role relating to human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t perform all or at least some of the HRM tasks.

For example, most managers deal with compensation, motivation, and retention of employees—making these aspects not only part of HRM but also part of management. As a result, this book is equally important to someone who wants to be an HR manager and to someone who will manage a business.