Appropriate level of investment in NCA

• Underinvestment?

  stifle business growth

  • inability of business to operate effectively and satisfy customer needs
• overinvestment?

  lack of productivity, inability to repay debt, poor ROR for owner
• NCA?

  heart of business operations and leads to future growth.
• NCA purchase should be financed by what?

  long term debt/equity finance and an adequate profitability earned so owners received anticipated ROR