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How a firm can estimate the optimal level of current assets

A corporation can have too much working capital. Explain. Explain how can a firm estimate the optimal level of current assets.

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A firm can have too much working capital if it is losing the opportunity to invest in high returning fixed assets and if it goes beyond the amount of working capital needed for reasonable liquidity needs.
The optimal level of working capital is found out by finding the amount that balances the need for liquidity and for profitability.

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