Main factors affecting working capital are as follows: 1) Nature of Business: Nature of business will play a fundamental role in the working capital requirement and is best demonstrated by comparing a manufacturing company to a retail company.
FACTORS DETERMINING WORKING CAPITAL REQUIREMENT The working capital needs of a firm are determined and influenced by various factors. A wide variety of considerations may affect the quantum of working capital required and these considerations may vary from time to time. The requirement of working capital of an enterprise depends upon the nature of business. A trading concern like a garments show-room, a service concern like an electricity undertaking or a transport corporation have a short operating cycle. Their requirement for working capital is small.
Jan 23, 2018 · Working capital & factors affecting its requirement (class 12) - Duration: 16:55. Commerce lectures 16,453 views Factors Affecting Cost of Capital - Free download as Powerpoint Presentation (.ppt), PDF File (.pdf), Text File (.txt) or view presentation slides online. Scribd is the world's largest social reading and publishing site. Dec 10, 2011 · he working capital needs of a firm are influenced by numerous factors. The important ones are i) Nature of business: The working capital requirement of a firm is closely related to the nature of ...
Working capital management refers to a company’s managerial accounting strategy designed to monitor and utilize the two components of working capital, current assets and current liabilities, to ensure the most financially efficient operation of the company. Factors affecting the Working Capital Requirements. Working capital requirement is influenced by various factors. In fact, any and every activity of a company affects the working capital requirements of the company. Some important of them are listed below. Nature of Business: The basic nature of a business influences the amount of working ... project planning and control. Factors affecting the level of working capital requirements comprises: inflation, delays in interim payments, taxation at source and deduction of retention funds. Indigenous contractors also recorded a low level of participation on major public contracts. Results of the
Inflation and deflation are two major factors which decide the next level of working capital in business. 10. Effect of External Business Environmental Factors There are many external business environmental factors which affect the need of working capital like fiscal policy, monetary policy and bank policies and facilities. Dec 10, 2011 · he working capital needs of a firm are influenced by numerous factors. The important ones are i) Nature of business: The working capital requirement of a firm is closely related to the nature of ... A capital intensive organisation requires higher investment in plant and machinery as it relies less on manual labour. The requirement of fixed capital for such organisations would be higher. Labour intensive organisations on the other hand it require less investment in fixed assets. The speed with which circulating capital completes its cycle i.e. conversion of cash into inventory of raw materials, raw materials into finished goods, finished goods into debts and debts into cash decides the Working Capital requirements of an organization. Slow movement of Working Capital cycle requires large provision of Working Capital. 4. Introduction to working capital: Concepts and characteristics of working capital, Factors determining the working capital. Estimation of working capital requirements. Current Assets Management: Management of current assets – Cash, Receivables and Inventory. Cash budget, Credit terms – Financing current assets 5.
Jan 03, 2017 · Business Studies Class 12, All Chapters - http://bit.ly/29FqrUqcla Factors affecting working capital requirements:- Operating Cycle Nature of Business Scale ... Conceptual Framework of Working Capital Management 1.1 Introduction 1.2 Meaning of Working Capital 1.3 Types of Working Capital 1.4 Methods of estimating Working Capital 1.5 Adequacy of Working Capital 1.6 Inadequacy and Excess of Working Capital 1.7 Factors affecting the Working Capital Requirements 1.8 Sources of Working Capital
Jun 10, 2010 · Working Capital – Definition and Factors Affecting Working Capital Working capital is the amount of money that a company has tied up in funding its day-to-day operations. A company has to tie up money to fund its stocks, credit sales and other current assets, but this is offset by its ability to fund this from current liabilities liabilities such as purchases on credit. Factors Affecting Requirements for Working Capital: In addition to the investment in a fixed asset, it is sometimes necessary to carry additional cash, receivables or inventories. This investment in working capital is treated as a cash outflow at the time it occurs. The working capital needs of a firm are influenced by the following factors: project planning and control. Factors affecting the level of working capital requirements comprises: inflation, delays in interim payments, taxation at source and deduction of retention funds. Indigenous contractors also recorded a low level of participation on major public contracts. Results of the Working capital advance by commercial bank Bank finance are the main institutional sources of working capital finance in India. Bank considers firms sales and production plans and the desirable level of current assets in determining the working capital requirements. The amount approved is called credit limit.