Question

'Kanand Lad.' is an Automobile manufacturing company started in 2014 under 'Make in India' initiative of the Government of India. Expecting higher growth in future, it developed higher capacity in the current year taking advantage of the subsidies provided by the government. This would enable 'Kanand Ltd.' to meet anticipated higher demand quickly. For this, 'Kanand Ltd.' invested large amounts in fixed assets leading to higher requirements of fixed capital Identify the factor affecting fixed capital requirements which 'Kanand Ltd.' kept in mind to meet higher anticipated demand quicker. 

Options

• Scale of operations

• Nature of business

• Diversification

• Growth prospects

Answer 1

Growth prospects

Explanation: 

Kanand Ltd. made an investment in the ability to quickly meet anticipated demand, indicating room for expansion. Forecasts for future business development influence fixed asset investment decisions in order to increase production capacity and meet future demand.