Explain the factors determining the working capital requirements. - Vidyadip

Question

Explain the factors determining the working capital requirements.

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Answer

Following factors determine the working capital requirements:

Turn over: Higher is the sales turn over, lower is the requirement of working capital. The revenue is obtained from the current assets. On the other hand, lower is the sales turn over; higher is the requirement of working capital.
Tax liability: Increase in the tax liability increases the requirement of working capital and decrease in.

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