How does the production cycle impact working capital ?
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Types of Working Capital
This is profits the company earns from its business operations. Long-term financing is another option for working capital. In essence, you spread repayment of your financing over a longer period of time, thus reducing the short-term impact. Companies can sell assets to generate cash.
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During the boom period, the demand of aproduct increases and sales also increase. Therefore, more working capital is needed. On the contrary, during the period of depression, the demand declines and it affects both theproduction and sales of goods. Therefore, in such a situation lessworking capital is required.
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