Question

The working capital requirement of a business is not likely to be high when?

Options

• The nature of business is trading

• Scale of operation of business is large

• It is difficult to procure raw material

• During period of depression

Answer 1

During period of depression

Explanation:

1. During a depression, sales slow down, production decreases, and the need for working capital reduces.
2. In contrast:
   • Trading businesses need more working capital to buy and sell goods.
   • Large-scale operations require more funds.
   • If raw materials are hard to get, the business needs more funds to stockpile them.