2. The working capital requirement of a business is not likely to be high when?
(a) The nature of business is trading
(b) Scale of operation of business is small
(c) It is difficult to procure raw material
(d) The rate of inflation is low
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The working capital of a company is the capital being used to run the day to day trading activities, it is usually the difference between the current assets and the current liabilities.
When the nature of business is trading not much of working capital is needed.
When the scale of operation of the business is small, little working capital will be required since the operation is minimal.
The working capital requirement will not be high when the procurement of raw material is difficult or not readily available.
When the rate of inflation is low, the working capital requirement will likely not be high.
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