Q.What are the factors that determine the working capital requirements of a business?

Working capital is the funding needed for a business's routine, short-term operating needs, such as purchasing raw material, paying wages, and holding current assets.

Working Capital

This is a TS Inter 1st-year Commerce topic on sources of business finance, aligned with the NCERT/CBSE Business Studies treatment of the subject. Working capital refers to the capital required by a business enterprise to run its day-to-day operations — purchasing raw materials, meeting wage and other routine payments, and holding current assets such as raw materials, stock-in-trade and bills receivable. Unlike fixed capital (used for long-term assets), working capital keeps circulating through the operating cycle of the business. The amount of working capital needed varies with the nature of the business: trading concerns, which hold large stocks for resale without adding further processing …