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प्रश्न
Explain the following as a factor affecting the requirement of working capital:
Level of competition
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उत्तर
The higher the extent of competition in the market, the larger is the amount of stock of goods that the firms must maintain to meet the demand; therefore, the higher is the requirement of working capital. Businesses occasionally have to lengthen the credit terms as well because of competition.
More competition ⇒ High working capital
Less competition ⇒ Low working capital
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संबंधित प्रश्न
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| 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. |
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