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128 Corporate Finance BRILLIANT’S

inter-related to each other. The decisions taken Ho$ {bE {b`m OmZo dmbm {ZU©` AÝ` AgoQ²>g H$mo ^r
for one current assets also affects the other à^m{dV H$aVm h¡& 
current assets.

DETERMINANTS OF WORKING CAPITAL
d{Hª$J H¡${nQ>b Ho$ {ZYm©aH$

Q.15. Explain with examples any six factors on which the working capital requirements of an
industrial organization depends.
{H$Ýht N>… H$maH$m| H$mo CXmhaU g{hV g_PmB`o {OZ na EH$ B§S>pñQ´>`b Am°J}ZmBOoeZ H$s d{Hª$J H¡${nQ>b
Amdí`H$VmE± {Z^©a H$aVr h¢&
OR
Briefly explain factors that determine the working capital need of a firm.
CZ H$maH$m| H$m g§{jßV dU©Z H$s{OE Omo EH$ g§ñWm H$s d{Hª$J H¡${nQ>b Amdí`H$Vm H$m {ZYm©aU H$aVo h¢&
Determinants of Working Capital d{Hª$J H¡${nQ>b Ho$ {ZYm©aH$ VËd

Adequate working capital is required for {H$gr {~OZog H$mo g\$bVmnyd©H$ MbmZo Ho$ {bE
the efficient conduct of a business. The working
n`m©ßV d{Hª$J H¡${nQ>b H$s Oê$aV hmoVr h¡Ÿ& {H$gr \$_©
capital need of a firm is influenced by various
factors. There is no specific rule or formula to H$s d{Hª$J H¡${nQ>c H$s Amdí`H$Vm H$B© H$maH$m| go à^m{dV
determine the need for working capital. The hmoVr h¡& Bg Amdí`H$Vm H$mo {ZYm©[aV H$aZo H$m H$moB©
factors affecting working capital requirement {d{eï> {Z`_ `m gyÌ Zht h¡& d{Hª$J H¡${nQ>c H$s
may also vary from time-to-time and so the Amdí`H$Vm H$mo à^m{dV H$aZo dmbo H$maH$ ^r g_`-g_`
working capital needed at one point of time na ~XbVo ahVo h¢ Bg{bE EH$ g_` d{Hª$J H¡${nQ>c H$s
may not be suitable for some other situation. Omo Amdí`H$Vm h¡ dh {H$gr AÝ` g_`
This is the reason that the
Determinants of na Amdí`H$ Zht hmo ^r gH$Vr h¡& Bgr
determination of working capital
Working Capital H$maU go d{Hª$J H¡${nQ>c H$s Amdí`H$Vm
requirement is a continuous
process and it must be under- 1. Nature and size of the H$m {ZYm©aU EH$ gVV² à{H«$`m hmoVr h¡ Am¡a
business ~XbVr n[apñW{V Ho$ AZwgma Bgo {Z`{_V
taken regularly as per the chan-
2. Volume of sale ê$n go nyam H$aZm Amdí`H$ hmoVm h¡Ÿ&
ging situations. Following are the
3. Condition of demand {H$gr \$_© H$s d{Hª$J H¡${nQ>c H$s
factors which generally influence
4. Credit Policy of the
the working capital requirements Amdí`H$VmAm| H$mo gm_mÝ`V… {ZåZ H$maH$
firm
of the firm: à^m{dV H$aVo h¢…
5. Manufacturing cycle
1. Nature and size of the 6. Change in price level 1. {~OZog H$s àH¥${V Am¡a AmH$ma…
business: Working capital 7. Efficiency and perfor- {H$gr \$_© Ho$ d{Hª$J H¡${nQ>c H$s Amdí`-
requirements of a firm are mance H$Vm {~OZog H$s àH¥${V go à^m{dV hmoVr
influenced by the nature of the 8. Change in technology h¡& Omo \$_© Q´>oqS>J H$aVr h¢ CÝh| ñWm`r
business. Firms which are 9. Inflation AgoQ²>g _| ~hþV H$_ H¡${nQ>c BÝdoñQ> H$aZm
involved in trading, have a very 10.Market conditions n‹S>Vm h¡ bo{H$Z d{Hª$J H¡${nQ>c _| CZH$m
small investment in fixed assets 11.Abnormal factors BÝdoñQ>_|Q> A{YH$ ahVm h¡& CXmhaU Ho$