Definition of working capital ? Write the factor which effect the working capital ??
Answers
Explanation:
Working Capital
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”.
The factors affecting working capital requirement are as follows:
The factors affecting working capital requirement are as follows:i. Business Cycle:
The factors affecting working capital requirement are as follows:i. Business Cycle:When there is boom in the economy, sales will increase, which will lead to an increase in investment in stock.
ii. Requirement of Cash:
Hence, additional working capital would be required. During recession period, sales would decline and the need of working capital would also decrease.
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:The working capital requirement increases with the growth of firm. It needs funds continuously to support large scale operation.
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:The working capital requirement increases with the growth of firm. It needs funds continuously to support large scale operation.iv. Seasonal Fluctuations:
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:The working capital requirement increases with the growth of firm. It needs funds continuously to support large scale operation.iv. Seasonal Fluctuations:The requirement of working capital depends upon the seasonal fluctuations. It states that, if the demand for the product is seasonal, the working capital required in that
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:The working capital requirement increases with the growth of firm. It needs funds continuously to support large scale operation.iv. Seasonal Fluctuations:The requirement of working capital depends upon the seasonal fluctuations. It states that, if the demand for the product is seasonal, the working capital required in thatseason will be more.
The requirement of working capital depends upon the cash required by the organization for various purposes. If the requirement of cash is more, then company requires more working capital and viceversa.iii. Growth and Expansion Activities:The working capital requirement increases with the growth of firm. It needs funds continuously to support large scale operation.iv. Seasonal Fluctuations:The requirement of working capital depends upon the seasonal fluctuations. It states that, if the demand for the product is seasonal, the working capital required in thatseason will be more.For e.g. The demand for sweaters is more in winter. Sweater manufacturing companies need more working capital before winters to make the goods available in the market before the season starts.