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प्रश्न
Justify the following statement.
The nature of business affects the working capital requirement.
उत्तर
There are no precise standards to measure working capital adequacy. Management has to determine the size of working capital in light of certain aspects of the business firm and the economic environment within which the firm operates. Firms engaged in manufacturing essential products of daily consumption would need relatively less working capital as there would be constant and sufficient cash inflow in the firm to take care of liabilities. Likewise, public utility concerns have to maintain a small working capital because of a continuous flow of cash from their customers. On the contrary, if the business is dealing in Luxurious products, it requires a huge amount of working capital as the sale of Luxurious items is not frequent. Trading/merchandising firms that are concerned with the distribution of goods have to carry big inventories of goods to meet customers' demands and have to extend credit facilities to attract customers. Hence, they need a large amount of working capital.
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संबंधित प्रश्न
Distinguish between Fixed capital and Working capital.
Match the correct pairs:
| Group 'A' | Group 'B' | ||
| (1) | Working capital | (a) | Redeemed capital |
| (2) | Equity share capital | (b) | Secretary |
| (3) | Share warrant | (c) | Shares do not have distinctive numbers |
| (4) | Recommendation of dividend | (d) | Fixed assets |
| (5) | Fungibility | (e) | The link between SEBI and Depository |
| (f) | Board of Directors | ||
| (g) | Registered document | ||
| (h) | Sum of current assets | ||
| (i) | Bearer document | ||
| (j) | Permanent capital |
Write a word or a term or a phrase which can substitute the following statement.
Capital needed to acquire fixed assets which are used for longer period of time.
Write a word or a term or a phrase which can substitute the following statement.
The sum of current assets.
State whether the following statement is true or false.
Financial institutions and banks cater to the working capital requirement of business.
Answer in one sentence.
What is fixed capital?
Explain the following term/concept.
Fixed capital
State any four factors affecting fixed capital requirement.
Justify the following statement.
There are various factors affecting the requirement of working capital.
Answer the following question.
Discuss the factors determining working capital requirement.
Fixed capital is also referred as circulating capital.
Explain the following term/concept:
Production Cycle
Distinguish between Fixed Capital and Working Capital.
Distinguish between the following.
Fixed Capital and Working Capital
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
Distinguish between the following.
Fixed Capital and Working Capital.
