Advertisements
Advertisements
Question
Explain the following as factor affecting the requirements of fixed capital:
Natural of business
Solution
Nature of business: The given company deals in manufacturing (having a large operating cycle), so it requires large fixed capital. Firms involved in a large operating cycle require higher fixed capital.
APPEARS IN
RELATED QUESTIONS
Big retail stores requires large amount of ............................. capital.
- Fixed
- Working
- Loan
‘Best Bulbs Pvt. Ltd. was manufacturing good quality LED bulbs and catering to local market. The current production of the company is 800 bulbs a day. Sumit, the marketing manager of the company surveyed the market and decided to supply the bulbs to five-star-hotels also. He anticipated the higher demand in future and decided to buy a sophisticated machine to further improve the quality and quantity of the bulbs produced.
Identify the factor affecting fixed capital requirements of the company.
Answer the following question:
In the paint industry, various raw materials are mixed in different proportions with petroleum for manufacturing different kinds of paints. One specific raw material is not readily and regularly available to the paint manufacturing companies. Bonler Paints Company is also facing this problem and because of this, there is a time lag between placing the order and the actual receipt of the material. But once it receives the raw materials, it takes less time in converting it into finished goods.
Identify the factor affecting the working capital requirements of this industry.
Answer the following question.
Explain briefly any four factors affecting the fixed capital requirements of an organisation.
‘Reliable Transport Services Ltd.’ specialises in transporting fruits and vegetables. It has a good reputation in the market as it delivers the fruits and vegetables at the right time and at the right place.
A state with reason whether the working capital requirements of ‘Reliable Transport Services’ will be high or low.
How does 'Inflation' affect the working capital requirements of a company? State.
Explain the following as factor affecting the requirements of fixed capital:
Growth prospects
Explain the following as factor affecting the requirements of fixed capital:
Level of collaboration
Explain the following as factor affecting the requirements of working capital:
Availability of raw material
Explain the following as a factor affecting the requirement of working capital:
Level of competition
Attempt the following
What are the factors affecting requirement of fixed capital ?
Discuss in brief any four factors that affect the working capital requirement of a company.
Higher debt-equity ratio results in
Which fund in an organisation possess finance for day to day operations
Bright Bulbs Pvt. Ltd., is manufacturing good quality LED bulbs and catering to the local market. The current production of the company is 1,000 bulbs a day. Anita, the marketing manager of the company, surveyed the market and decided to supply the bulbs to five-star-hotels also. She anticipated the higher demand in future and decided to buy a sophisticated machine to further improve the quality and quantity of the bulbs produced. Which factor affected the fixed capital requirements of the company?
State any three factors that determine the requirement of fixed capital of a company.
Match the factors affecting fixed capital requirements given in Column - I with their explanations given in Column - II:
| Column - I | Column - II | ||
| (A) | Nature of Business | (i) | A trading organisation needs lower investments in fixed assets as compared to a manufacturing organisation. |
| (B) | Technology upgradation | (iii) | A textile manufacturing company is installing a cement manufacturing plant and thus its investments in fixed assets is increasing. |
| (C) | Diversification | (iii) | A capital-intensive organisation requires higher investments in fixed assets as compared to labour- intensive organisation. |
| (D) | Choice of Technique | (iv) | Mobile phones became obsolete faster and are replaced much sooner than furniture or many other assets. Hence, these type of businesses require more fixed capital. |
