Question

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

Options

• The scale of the business operation is small

• When the growth prospects of the business are not stagnant

• When the raw material is easily available

• When the organisation buys goods on credit and sells them in cash

Answer 1

When the growth prospects of the business are not stagnant

Explanation:

• Small-scale businesses need less working capital.
• Growing businesses need more working capital for expansion.
• No need to stockpile, so less working capital is required.
• Credit purchases reduce working capital needs; cash sales bring in immediate funds.