Business Studies

Financial Management

Medium

Which of the following statement is TRUE regarding Factors affecting working capital Requirements ?

Other factors remaining same Trading Business requires less working capital than Manufacturing Business.

The organizations which operate on a higher scale require less working capital.

In case of boom, lesser working capital is required.

A liberal credit policy requires less amount of working capital.

✅ Correct Option: 1

Trading businesses do not have a production cycle and hold less inventory, so they require less working capital than manufacturing businesses, making (1) true. Higher scale requires more (not less) working capital. Boom periods need more working capital due to higher activity. A liberal credit policy increases receivables and thus needs more working capital. Hence only (1) is true.

2023: 22 June Shift 1

Identify the decision in which a company has to choose where to invest its resources so that it is able to earn the maximum possible return for their investors.

2023: 22 June Shift 1

Match List I with List II

LIST I	LIST II
A. Interest Coverage Ratio	I. Rate of return
B. Choice of Technique	II. Fixed Capital
C. Credit Allowed	III. Capital structure
D. Capital budgeting decisions	IV. Working Capital

Choose the correct answer from the options given below:

2023: 11 June Shift 3

Match List - I with List - II.

List - I	List - II
(A) Production cycle	(I) Is reflected in a higher inventory turnover ratio
(B) Credit allowed	(II) Reduces the need of working capital
(C) Operating efficiency	(III) Increases the need of working capital
(D) Credit availed	(IV) Time span between receipt of raw material and their conversion into finished goods

Choose the correct answer from the options given below :

2023: 11 June Shift 3

Match List - I with List - II.

List - I (Factors affecting)	List - II (factors)
(A) Capital structure	(I) Floatation cost
(B) Capital Budgeting decision	(II) The rate of return
(C) Fixed capital	(III) Collaboration Level
(D) Working capital	(IV) Production Cycle

Choose the correct answer from the options given below :

2023: 22 June Shift 1

_______ of a company affects both the profitability and the financial risk.

2023: 11 June Shift 3

Which factors are to be considered while determining Fixed Capital, out of the following ?

(A) Technology upgradation

(B) Diversification

(D) Operating efficiency

(E) Seasonal factors

Choose the correct answer from the options given below :

Which of the following statement is TRUE regarding Factors affecting working capital Requirements ?

Solution

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