What does an Aggressive Working Capital Policy entail?

An Aggressive Working Capital Policy involves keeping working capital to a minimum to allocate more resources towards capital investments. This approach focuses on reducing current assets, such as cash and inventory, in order to utilize those funds for long-term investments that may yield higher returns. The strategy is predicated on the belief that investing in capital assets can drive growth and enhance profitability, even if it means operating with a tighter liquidity position.

By minimizing working capital, a company may take on more risk, but it also seeks to maximize the efficiency of its operations and capitalize on opportunities for expansion or improvement. This policy generally targets high returns and growth potential, reflecting a more assertive stance in managing financial resources.