Advertisements
Advertisements
प्रश्न
Answer the following question.
Explain briefly any four factors affecting the fixed capital requirements of an organisation.
Answer the following question.
Explain briefly any four factors that affect the fixed capital requirements of a company.
Advertisements
उत्तर
Factors affecting the fixed capital requirements of an organisation:
- A scale of operations: A company which is operating in a large-scale of operations will require larger fixed assets in the form of plants, land, and building.
Larger organisation ⇒ Higher investment in fixed assets
Small organisation ⇒ Lower investment in fixed assets - Choice of technique: A company may use labour-intensive or capital-intensive techniques. A company using capital-intensive techniques will require larger fixed assets, whereas a company using the labour-intensive technique will require less fixed assets.
Capital-intensive organisation ⇒ Higher investment in fixed assets
Labor-intensive organisation ⇒ Lower investment in fixed assets - Technology up-gradation: Due to changes in technology or it becoming obsolete over time, companies require a large amount of investment in fixed capital. For example, certain machinery becomes obsolete very soon compared to other assets such as furniture. Therefore, a larger fixed capital is required for upgradation.
Faster up-gradation ⇒ Higher investment in fixed assets
Slower up-gradation ⇒ Lower investment in fixed assets - Financing alternatives: If leasing facilities are available without any lengthy procedures in the financial market, then the fixed capital requirements will be less.
Non-availability of financing alternatives⇒ More fixed capital
Availability of financing alternatives ⇒ Less fixed capital - Growth prospects: a Higher growth of an organisation requires a higher investment in fixed assets. When growth is expected, a company usually chooses to create a higher capacity to meet anticipated higher demand. This further requires a larger investment in capital.
- Type of business: The type of business has a direct bearing upon the fixed capital requirements of the firm. A trading concern needs lower investment in fixed assets as compared to a manufacturing business having a large operating cycle.
APPEARS IN
संबंधित प्रश्न
Big retail stores requires large amount of ............................. capital.
- Fixed
- Working
- Loan
Identify the factor affecting fixed capital requirements of Fashion-ate Pvt. Ltd.
Radhika and Vani who are young fashion designers left their job with a famous fashion designer chain to set-up a company 'Fashionate Pvt. Ltd.' They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening. For the coaching centre they hired the first floor of a nearby building. Their major expense was money spent on photocopying of notes for their students. They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier. In the basement of the building of 'Fashionate Pvt. Ltd.' Praveen and Ramesh were carrying on a printing and stationery business in the name on 'Neo Prints Pvt. Ltd.' Radhika approached Praveen with the proposal to buy a photocopier jointly which could be used by both of them without making separate investment. Praveen agreed to this. Identify the factor affecting fixed capital requirements of 'Fashionate Pvt. Ltd.'
‘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.
'Indian Logistics' has its own warehousing arrangements at key locations across the country. Its warehousing services help business firms to reduce their overheads, increase efficiency and cut down distribution time.
A state with reason, whether the working capital requirements of 'Indian Logistics' will be high or low.
‘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.
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:
Operating efficiency
What are the factors affecting requirement of fixed capital?
What is Working Capital? Factors affecting requirement of Working capital?
List any three factors affecting the Working Capital requirement of a company.
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.
The capital structure of XYZ Ltd. is highly geared. Explain any four factors that were considered by its Finance Manager while formulating such a capital structure for the company.
