1. a. Investment decision has been taken by Arun. Investment decision seeks to
2. determine as    to how the firm's funds are     invested        in different assets. It helps   to
3. evaluate        new     investment      proposals and select    the     best option on the basis of
4. associated risk and return. Investment  decision        can     be      long term or short-term.        A long-term investment decision is      also called a   Capital Budgeting decision.     For example,    a social        or charitable   project is often not approved based     on rate of
5. return, but more on the desire of a business to foster  goodwill        and     contribute      back to its community.
6. b.Working capital, also called net working capital, is a        liquidity       ratio that      measures a company’s ability to pay off       its current liabilities with its current        assets. Working capital is calculated by        subtracting     current liabilities from        current assets. The three       factors mentioned in    the     paragraph which are likely      to      reduce  the     working capital requirements    of      his     business are    as follows:
7. i.  Availability        of      raw     material: As    there is        easy availability of Sandalwood which is        used as the     base material for       production, the working capital requirements of his     business will   be      less    as there is no need to  stock the       raw     materials.
8. ii. Production cycle: The production    cycle is shorter and less time is required to
9. manufacture     incense sticks. Thus,   the working capital requirements of     his
10. business will   below.
11. iii. Credit availed: Due        to the fact that the suppliers of       other types of raw material
12. needed for production follow a  liberal credit  policy, the business can be
13. operated on     minimum working capital..
14.