You Care Bhd is operating in health industries, and it supplies medical grade gloves. The demand for its product during this movement control order (MCO) period due to Covid 19 has increased tremendously. Below is the current summarized statement of the financial position of You Care Bhd.

Assets RM000			Liabilities RM000
Net fixed assets Inventories Accounts receivable Cash	1,500 400 750 900		Common equity 10-year borrowings Retained earnings Short term debt Account payables	1,300 800 500 350 600
	3,550			3,550

Additional information:

• Before MCO period, the amount of its inventory, accounts receivable and cash are RM150,000, RM590,000 and RM690,000. The net fixed assets remain the same.

Required

1. Ascertain the working capital policy adopts by the company and its implication to the firms risk and return
2. Explain the risk return trade-off between liquidity and profitability in working capital environment.