Capital management strategy

Capital Management Strategy
Name
Institutional Affiliation
Question 1
What are the two major components of a working capital management strategy (describe in detail)?
Response
The working capital management strategy has two major components namely:
Current assets
Current assets are termed as the short-term assets which can be easily turned into cash in a period of fewer than 90 days. The items include money, bank, short-term investments, accounts receivable and the inventory. The receivables are the monies owed to the firm by outside entities and should be received on a timely basis as the sooner it is rendered, the earlier it can be invested to earn further profits. It is thus essential to have an active inventory management system that has enough stock for orders but not excesses warranting storage costs unnecessarily and consuming space which could be used for other purposes.
Current liabilities
Current liabilities or short-term obligations are the debts incurred by the firm in the normal operations are expected to be paid in the same accounting period. Examples include unpaid employee wages, taxes payable, accounts payable, etc. also included in the category is the unearned revenues as the goods and services paid for have not been supplied.
Question 2
Compare and contrast an aggressive and conservative asset mix strategies. (Your comparison should address goals, liquidity and risk.)
Response
The strategies, aggressive and conservative, are not innately diverse as they can employ the same tools but just in different proportions (Cleverly & Cleverly, 2018).

In an aggressive asset strategy, the focus is pegged on capital appreciation rather than income or for safety purposes. In such an approach, the investments are most burdensome on stocks and less in fixed income and cash. Contrastingly, in a conservative asset strategy, the focus shifts to fixed incomes and on the safety of the principal. The plan thus invests heavily on fixed incomes bonds, bank term deposits, cash, etc.
Goals
As earlier stated, the purpose of aggressive asset strategy rests on capital appreciation and thus invests in stocks for their returns rather than the risk-free bonds. However, in the conservative asset strategy, the gains are aligned to the risk-free bonds or the least risky bonds.
Liquidity
The aggressive asset strategy experiences less liquidity as most of the liquid assets are spent in the generation of maximum returns. Contrastingly, the conservative asset strategy has more liquidity as the objective is capital conservation and the assets purchased can be quickly turned into cash.
Risk
Aggressive asset strategy is riskier as money is invested in stocks such as high-risk bonds to generate high risks. The conservative asset strategy is less risky as the capital is invested in less risky bonds which have high ratings (Cleverly & Cleverly, 2018). The capital could also be put in term deposits of banks to generate regular and stable incomes.
Reference
Cleverley, W.O. & Cleverley, J.O (2018). Essentials of Healthcare Finance. Burlington, MA: Jones & Bartlett Learning.