English

Explain the Following as Factors Affecting the Requirements of Working Capital: Production Cycle - Business Studies

Advertisements
Advertisements

Question

Explain the following as factors affecting the requirements of working capital:

Production cycle

Solution

Production cycle: A longer production cycle will require high working capital as it will take more time to convert raw material into finished products. On the other hand, a small production cycle will require less working capital.

Long production cycle ⇒ High working capital

Small production cycle ⇒ Low working capital

shaalaa.com
  Is there an error in this question or solution?
2013-2014 (March) All India Set 1

RELATED QUESTIONS

Answer the following question:
The Return on Investment (ROI) of a company ranges between 10 - 12% for the past three years. To finance its future fixed capital needs, it has the following options for borrowing debt:
Option ‘A’: Rate of interest 9%
Option ‘B’: Rate of interest 13%

Which source of debt, ‘Option A’ or ‘Option B’, is better? Give reasons in support of your answer. Also, state the concept being used in taking the decision.


Explain the following as factor affecting the requirements of fixed capital:

Choice of technique


Explain the following as factors affecting the requirements of fixed capital:

Technology upgradation


Explain the following as factors affecting the requirements of fixed capital:

Financing alternatives


Explain the following as factors affecting the requirements of working capital:

Scale of operations


Explain the following as factors affecting the requirement of working capital:

The credit allowed and availed


Varunica Ltd., a reputed truck manufacturing company, needs rupees twenty crores as additional capital to expand its business. Mr. Alind Jindal, the CEO of the company, wants to raise funds through equity. The Finance Manager, Mr. Nikhil Sachdeva, suggests that the existing shareholders be offered the privilege to subscribe to new issue of shares as per the terms and conditions of the company which was agreed by Mr. Alind Jindal.
Name the method through which the company decided to raise additional capital. 


What is working capital? Discuss five important determinants of working capital requirement?


Select the proper option from the options given below and rewrite the sentence:
The _________ capital remains in business almost permanently.

Why is working capital also known as circulating capital? 


Higher working capital usually results in :


Higher dividend per share is associated with


A fixed asset should be financed through


Current assets of a business firm should be financed through


Which of the following factors highlight the importance of capital budgeting decisions


______ of a firm refers to those assets which can be converted into cash or cash equivalents in a short period of time.


______ involve identifying various sources of funds and deciding the best combination for raising the funds. 


______ decision involves the decision regarding the distribution of profit or surplus of the company.


Net working capital may be defined as the:


A business firm should have extra funds to meet future emergencies. Identify the type of working capital indicated here.


Share
Notifications

Englishहिंदीमराठी


      Forgot password?
Use app×