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Fixed and Working Capital Investment Drivers

What factors are likely to drive a firm's outlays for new capital (such as plant, property, and equipment) and for working capital (such as receivables and inventory)? What ratios would you use to help generate forecasts of these outlays?

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The response addresses the queries posted in 830 words with references.

//Before describing about the Driving factors of firm's outlays for new fixed capital and for working capital, it is essential to gain knowledge about the significance of Investment decisions for the business. One should know about the impact of these decisions on the business activities.//

Investment decisions, whether it is related to fixed capital or working capital, are of vital significance in financial decision making. In the first place, profitability of a firm is affected by these decisions. Competitive position of the enterprise had also been bared by these decisions mainly because of the fact that they relate to fixed assets. (Khan & Jain, 2002) The fixed assets represent, in a sense, the true earning assets of the firm. To generate finished goods, the firms are enabled by them that can ultimately be sold for profit. These decisions are of considerable significance as the future success and growth of the firm depends heavily on them. (Khan & Jain, 2002)

//Above is the discussion of significance of Investment decisions for the business and their impact. Moving to the next direction, explanation about the Driving factors of firm's outlays for new fixed capital and for working capital is to be discussed.//

Driving factors of firm's outlays for new fixed capital and ...

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