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Question
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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