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Question
Explain the following term/concept.
Working capital
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Solution
Working capital is the capital which is used to carry out the day to day business activities. After estimating fixed capital requirement of the business firm, it is necessary to estimate the amount of capital, that would be needed to ensure smooth functioning of the business firm. A business firm requires funds to store adequate raw materials in stock.
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RELATED QUESTIONS
Match the correct pairs:
| Group 'A' | Group 'B' | ||
| (1) | Working capital | (a) | Redeemed capital |
| (2) | Equity share capital | (b) | Secretary |
| (3) | Share warrant | (c) | Shares do not have distinctive numbers |
| (4) | Recommendation of dividend | (d) | Fixed assets |
| (5) | Fungibility | (e) | The link between SEBI and Depository |
| (f) | Board of Directors | ||
| (g) | Registered document | ||
| (h) | Sum of current assets | ||
| (i) | Bearer document | ||
| (j) | Permanent capital |
Write a word or a term or a phrase which can substitute the following statement.
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State whether the following statement is true or false.
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State whether the following statement is true or false.
A firm with large scale operations will require more working capital.
Initial planning of capital requirement is made by______.
Explain the following term/concept.
Fixed capital
Justify the following statement.
There are various factors affecting the requirement of fixed capital.
Justify the following statement.
Fixed capital stays in the business almost permanently.
Fixed capital is also referred as circulating capital.
______ capital is used to carry out day-to-day business activities.
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
Explain the following term/concept:
Fixed capital
Liberal credit policy creates a problem of bad debts.
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Fixed Capital and Working Capital
Liberal credit policy creates a problem of bad debts.
Distinguish between Fixed Capital and Working Capital.
