Why do businesses invest in short-term investments?

Businesses invest in short-term investments to earn extra income on money that is not needed immediately. Instead of keeping cash idle, companies park it in things like fixed deposits, treasury bills, or liquid mutual funds, which are safe and can be converted into cash quickly. For example, an Indian company may invest surplus cash in a liquid fund until it needs money to pay salaries or suppliers. These investments help maintain liquidity while earning some return with low risk.

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