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Explain the Following as Factors Affecting the Requirements of Working Capital: Scale of Operations - Business Studies

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

Scale of operations

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Solution

Working capital refers to current assets which help in day-to-day business operations.

The 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

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