Management of working capital is an extremely important area of financial management as current assets represent more than half of the total assets of a business. Fixed assets, although essential for a business organization, does not by itself produce revenue. Fixed assets act with current assets to generate revenue. Therefore working capital is necessary for utilizing the productive capacity of fixed capital. For shortage of working capital, the enterprise would suffer reduction in earnings due to productive capacity remaining unutilized. Whereas excess working capital leads to extra cost for want of productive capacity. Therefore, an enterprise should maintain an optimum amount of working capital so as to carry on the productive and distributive activities smoothly. The determination of optimum level of working capital involves fundamental decisions to an organisation’s liquidity, which in turn are influenced by a trade off between profitability and liquidity. The organization always enjoys the leeway to combine a high or a low or moderate level of current assets to realize a given sales target. This is technically known as working capital leverage. The ratio of current assets with fixed assets or total assets can be used to analyse the investment policies pursued by the organization. A high level of investment in current assets lowers both risk and profitability whereas a low investment in current assets increases risk as well as profitability. KEYWORDS - Working Capital Management, Financial sickness of firm, analysis, current assets