Question

Define the term working capital. Describe the factors affecting working capital requirements.

Answer 1

Mark me as brainliest.

Hey mate,

Here is your answer:

Working capital means current assets or circulating capital.

Experts define working capital in both, narrow as well as broad sense.

In the narrow sense, it is defined as “the difference between current assets and current liabilities”.

Main factors affecting the working capital are as follows:

1) Nature of Business

2) Scale of Operations

3) Business Cycle

4) Seasonal Factors

5) Production Cycle

6) Credit Allowed

Hope it helps:-)

Answer 2

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WORKING CAPITAL is defined as the funds which are used in the day to day business operations of a company.

• The efficient management of working capital is important for both, the profitability and the financial health of the company.
• In layman’s term, every company needs a cash reserve to manage their daily running cost .