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Question
Explain the following as factors affecting the requirements of working capital:
Seasonal factors
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Solution
Working capital refers to current assets which help in day-to-day business operations.
Seasonal factors: A company selling seasonal products will require high working capital to meet higher sale, higher production, higher stock and more debtors. While a company selling goods throughout the season will require constant working capital which is low working capital spread throughout the season.
Peak season ⇒ High working capital
Lean season ⇒ Low working capital
RELATED QUESTIONS
Match the pairs
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Group A |
Group B |
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a. Fixed Capital |
1. Owned Capital |
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b, Overdraft facility |
2. Bearer document |
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c. Share certificate |
3. Investment in fixed assets |
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d. Debentures |
4. Current Account |
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e. Return on shares |
5. Application Money |
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6. Dividend |
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7. Investment in current assets |
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8. Borrowed capital |
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9. Savings Account |
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10. Registered Document |
Explain the following as factor affecting the requirements of fixed capital:
Choice of technique
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The difference between current assets and current liabilities.
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______ involve identifying various sources of funds and deciding the best combination for raising the funds.
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