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Question
A business firm should have extra funds to meet future emergencies. Identify the type of working capital indicated here.
Options
Special
Seasonal
Initial
Regular
Solution
Special
Explanation:
A firm may need additional working capital to meet future contingencies that may arise in business is called as special working capital. Special working capital is required in the unforeseen. contigencies such as:
- To manage sudden increase of demand in the market;
- Depression leading to piling up of inventory;
- During strikes, lockouts, and national calamities like earthquakes, floods, fire, etc.
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RELATED QUESTIONS
Match the pairs
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Group A |
Group B |
|
a. Fixed Capital |
1. Owned Capital |
|
b, Overdraft facility |
2. Bearer document |
|
c. Share certificate |
3. Investment in fixed assets |
|
d. Debentures |
4. Current Account |
|
e. Return on shares |
5. Application Money |
|
|
6. Dividend |
|
7. Investment in current assets |
|
|
8. Borrowed capital |
|
|
9. Savings Account |
|
|
10. Registered Document |
Explain the following as factor affecting the requirements of fixed capital:
Scale of operations
Explain the following as factors affecting the requirements of fixed capital:
Technology upgradation
Explain the following as factors affecting the requirements of working capital:
Nature of business
Explain the following as factors affecting the requirement of working capital:
The credit allowed and availed
How does working capital affect both the liquidity as well as profitability of a business?
Write a word or a term or a phrase which can substitute the following statement :
The difference between current assets and current liabilities.
Current assets are those assets which get converted into cash
______ decision involves the decision regarding the distribution of profit or surplus of the company.
Assertion (A): A commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Reason (R): Commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.
