Factors determining working capital requirements

The efficiency in controlling operating cost and utilizing fixed and current assets leads to operating efficiency.Ans: The factors determining working capital needs of a business firm are as follows.The requirement of working capital depends on the nature of. 12 Main Factors Affecting Working Capital.Question 1) Describe the functions of a Financial Management.

How to Calculate Working Capital By Sam Ashe-Edmunds. eHow Contributor Pin Share.

Determining working capital requirements, Cost Accounting

The amount of working capital is influenced by the storage period.

Internal and External Factors that Affect Working Capital Needs: Internal Factors. External. Chapter 8 Working Capital Management Last modified by: David Larrabee.The optimum utilization of assets in turn results in more fund release for working capital. (MORE).

What are the types of working capital? - Accounting

Find new research papers in: Physics Chemistry Biology Health Sciences Ecology Earth Sciences Cognitive Science Mathematics Computer Science.A firm needs capital to pay for its current expenses such as payment to employees, raw martial, bills gas, electricity and cash in hands.If the market is strong and competition is weak, a firm can manage with smaller inventory of finished goods because customers can be served with delay.Such business organizations have to buy raw material in bulk during the season to ensure an uninterrupted flow and process them during the entire year.

What is Working Capital Requirement? definition and meaning

A service firm, like electricity undertaking or a transport corporation which has a short operating cycle and which sells predominantly on cash basis, has a modest working capital requirement.Following are the important factors generally influencing the wrking capital requirements:1.

OPTIMIZATION OF WORKING CAPITAL FOR CONSTRUCTION PROJECTS. working capital for. needed to satisfy working capital requirements. 2.2 FACTORS OF WORKING CAPITAL.Definition of working capital requirement: The amount of working capital. working capital requirement:. determine its working capital requirement to see.However if the supply is unpredictable and scant then the firm, to ensure continuity of production, would have to acquire stocks as and when they are available and carry large inventories on an average.

Factors Influencing Managerial Decisions in Determining

For example, the manufacturing cycle in the case of a boiler, depending on its size, may range between six to twenty four month.

Working capital in valuation - NYU Stern School of Business

The credit term to be guaranteed to customer may depend upon the norm of the industry to which the firm belong.Big business organizations require more working capital than the small business organization.On the other hand, a firm manufacturing consumer goods like soaps, oil, tooth pastes etc. which have fairly even sale round the year, tends to have a stable working capital need. iii) Production Policy: A firm marked by pronounced seasonal fluctuation in its sale may pursue a production policy which may reduce the sharp variations in working capital requirements.

How to Raise Capital for Your Business - Angel Investors

The important ones are i) Nature of business: The working capital requirement of a firm is.For example, consider a firm manufacturing air conditioners.The quantum of working capital is depending upon a large number of factors.Working capital has a direct impact on cash flow in a business. A more useful tool for determining your working capital needs is the operating cycle.Size Of Business Working capital requirement of a firm is directly influenced by the size of its business operation.Working Capital Management. significance of adequate working capital, 5) factors for determining the.

Working capital - Wikipedia


Retails stores, for example must carry large stock of a verity of good to satisfy varied and continuous demand of their customer. 2) Market and demand condition - the working company related to its sales. it is difficult to precisely determine the relationship between the volume of sales and working capital need.How to Raise Capital for Your Business. which are specially designed to fit the monetary requirements of the new business owners.

In Business Accounting and Bookkeeping, Investing and Financial Markets.There are a number of factors influencing the working capital requirements of a.So, they need more working capital. 3. Storage Time Or Processing Period Time needed for keeping the stock in store is called storage period.

The challenge can be determining the proper category for the vast.Working capital requirement is influenced by various factors.Working Capital Targets for Enterprise Funds. It is essential that a government maintain adequate levels of working capital in its enterprise funds to.Credit policy of the firm: Another factor affecting working capital management is credit policy of the firm.