Question: Albato Ltd has a very refined system for evaluating proposals for investment in fixed assets. Its current assets are relatively uncontrolled and the factors which

Albato Ltd has a very refined system for evaluating proposals for investment in fixed assets. Its current assets are relatively uncontrolled and the factors which determine their level have not been analyzed. Questioned on this the managing director has said, Investment in fixed assets is long term and we would therefore be committed to our mistakes for a lengthy period. Current assets are very short term and do not carry that risk. It would in any case be difficult to evaluate the investment in current assets because they offer no financial return as do fixed assets. Do you agree with this argument? Discuss.

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