Explain any four factors which determine the working capital requireme

1.	Explain any four factors which determine the working capital requirement of a business.
Answer» Factors affecting Working Capital • Type/Nature of Business: Working capital level is generally higher in manufacturing-based versus service-based organisations. • Depends on the Volume of Sales: The higher the sale, the higher is the level of working capital required. • Seasonality: Peak seasons like festive seasons require a higher level of working capital. • Length of Operating And Cash Cycle: A longer operating and cash cycle increases the level of working capital.

Explain any four factors which determine the working capital requirement of a business.

Answer»

Factors affecting Working Capital

• Type/Nature of Business: Working capital level is generally higher in manufacturing-based versus service-based organisations.

• Depends on the Volume of Sales: The higher the sale, the higher is the level of working capital required.

• Seasonality: Peak seasons like festive seasons require a higher level of working capital.

• Length of Operating And Cash Cycle: A longer operating and cash cycle increases the level of working capital.