"In peak season because of higher level of activity, larger amount of working capital is required and vice versa". Which factor is being considered here for deciding the working capital requirements?
"In peak season because of higher level of activity, larger amount of working capital is required and vice versa". Which factor is being considered here for deciding the working capital requirements?
Solution
✅ Correct Option: 2
Seasonal factors affect working capital: in peak season, higher activity requires larger working capital, while in lean season the requirement falls. The statement describes exactly this. Business cycle refers to boom and depression phases of the economy, which is different. Hence the factor is Seasonal factors.
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