Liquidity and profitability are the two measures which always concerned with the stakeholders of a businesses while managing working capital. Profitability, as performance measure, is preferable by the management and owners. But lenders, on the other hand, look for liquidity of the business with more cash in hand position.
You are working as chief control accounts in Xee Ltd. Top management of the company decided to hold more cash for short term need of operating expenses and to attract lenders. However, you as controller of accounts disagreed with the decision of top management and tried to convince that company should keep minimum cash balance when there is lucrative return offered by the market. Top management did not completely convince with your argument and asked for two alternatives cash management policies with relevant justification which may trade off both investment opportunity and minimum acceptable cash position to attract lenders.