Factors determining working capital

Moreover, the time required in each process may differ from one process to another.Some of the factors affecting the working capital of a company are as follows: Factors Affecting the Working Capital: The firm must estimate its working capital very.Hence, the trading concern requires more amount working capital.Factors Determining Working Capital Requirement: There is no set of universally.Determining the Influences of. macro-economic variables and determine the variable that. factors and exogenous factors.

The study analyzes the importance of working capital in the automotive industry.

Factors that Influence a Company's Capital-Structure Decision

In any business, managing working capital is a never-ending task for the finance and accounting personnel.The results showed that the significant factors determining working capital included sales growth,.Sometimes, the production is carried on in anticipation of demand in future.

Therefore, the company requires less amount of working capital.If the company also is able to increase the price of their finished goods, it reduces this impact.

Factors determining working capital requirements - MBA NOTES

Higher, this time, higher would be the time of blocking funds in the working capital.

How to Calculate Working Capital (with Calculator) - wikiHow

Main factors affecting the working capital are as follows: (1) Nature of Business: The requirement of working capital depends on the nature of business.If the proportion of raw materials is small, the amount of working capital requirements is also low.

What are the factors determining the requirement of fixed

Find new research papers in: Physics Chemistry Biology Health Sciences Ecology Earth Sciences Cognitive Science Mathematics Computer Science.If shareholders have provided some funds towards the working capital needs to some extent, the company can get adequate amount of working capital without any difficulty.

Factors Influencing Working Capital Essay - 924 Words

Some companies have more earning capacity than others due to better quality of the products, monopoly in market and the like.In nutshell, trading concern requires more working capital and service organization requires less working capital whereas manufacturing concern requires the working capital between these ends.Understanding how to calculate working capital will help you keep abreast of your financial situation and take steps to address potential cash shortfalls.If the company prefer to issue bonus shares in the place of cash dividend, the company requires less amount of working capital.To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to.If the working capital cycle is long, there is a need of more amount of working capital and vice versa.

Working Capital Management And Debtors Management

Working Capital Management And Debtors Management - authorSTREAM Presentation.


On the other hand, if the demand for the product is low, prices of the products are also low during the period of depression.


Determining the Influences of Macroeconomic Variables on

If the volume of sales increases, the company requires more amount of working capital and vice versa.

Therefore, the company requires more amount of working capital.In the case of service organization, large number of fixed assets are required and the services are rendered only on cash basis.Net Cash Profit: Profit or retained earnings are one of the sources of working capital for the business.Some important of them are listed below: Factors Influencing Working Capital Management.He is passionate about keeping and making things simple and easy.


Working capital cycle refers to the time required to convert the raw materials into finished goods and up to the stage of conversion of finished goods into cash form.Working capital requirement is influenced by various factors.The need of amount of working capital is high if the speed of growth of the company is high and vice versa.

Working capital management is the management of the short-term investment and financing of a company.Growth and Expansion: Some industries are static and others are growing.If the price of the products is steady, then, the need of working capital is low.Obviously, growing industry grows the requirement of working capital also as compared to static industry.