Corporate finance deals with mainly three aspects of financial decision making-capital budgeting, capital structure and working capital management. While the former two focus on financing and managing long-term investment decisions, the latter deals with the management of short-term capital requirements of the firm. Genestenberug, "Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another, as for example, from cash to

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... tories to receivables into cash". Working capital is an important component of the capital of a firm that helps to carry out the day-today activities. Working Capital affects both the liquidity and profitability. Liquidity plays a significant role in successful functioning of an entity and maximising its Profit. Increasing profits at the cost of liquidity can create detrimental effect to a firm. Liquidity ensures that a firm is able to meet its short-term obligations and its continuous flow assures firms profitability. Conversely, firm that has low liquidity faces high risk which results to high profitability. For these reasons working capital management should be given proper consideration and one should try neither to maximize nor minimize the liquidity ratios; one should always try to optimize the liquidity of a firm. Efficient management of working capital is a fundamental part of the overall corporate strategy in creating shareholders' value.