Commerce (English Medium) इयत्ता १२ - CBSE Question Bank Solutions for Business Studies

Explain briefly any four factors that affect the working capital requirement of a company.

'Sarah Ltd.' is a company manufacturing cotton yarn. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is the availability of enough cash in the company and good prospects for growth in future. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of Rs 40 lakhs from IDBI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement. The above discussion about the company leads to various factors which decide how much of the profits should be retained and how much has to be distributed by the company. Quoting the lines from the above discussion identify and explain any four such factors.

Organising involves a series of steps in order to achieve the desired goals

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

Scale of operations

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:

Nature of business

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

Scale of operations

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

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

Production cycle

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. 

A company wants to increase its market share from the present 10% to 25% to have a dominant position in the market by the end of the next financial year. Ms Rajni, the  sales manager has been asked to prepare a proposal that  will outline the options available for achieving this objective. Her report included the following options - entering new  markets, expanding the product range offered to customers, using sales promotion techniques such as giving rebates,  discounts or increasing the budget for advertising activities.  Which step of the planning process has been performed by  Ms Rajni?

Amrit is running a ‘transport service’ and earning good returns by providing this service to industries. Giving reason, state whether the working capital requirement of the firm will be ‘less’ or ‘more’.

Ramnath is into the business of assembling and selling of televisions. Recently he has adopted a new policy of purchasing the components on three months credit and selling the complete product in cash. Will it affect the requirement of working capital? Give reason in support of your answer.

What are the steps in the process of organising?

How does working capital affect both the liquidity as well as profitability of a business?

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

The workers of a factory are unable to work on new machines  and always demand for help of supervisor. The Supervisor  is overburdened with their frequent calls. Suggest the  remedy. ( Hint: training)