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BRILLIANT’S Working Capital Management 129

but it requires a large sum of money to be {bE, EH$ [aQ>ob ñQ>moa H$mo {d{^Þ dñVwAm| H$m ~‹S>m ñQ>m°H$
invested in working capital. For example, a aIZm n‹S>Vm h¡ AV… Cgo d{Hª$J H¡${nQ>c H$s n`m©á
retail store is required to maintain large stock
of a variety of goods, so it will need sufficient Amdí`H$Vm hmoJr& Xÿgar Amoa gmd©O{ZH$ joÌ go Ow‹S>r
working capital. On the other hand, companies H$ån{Z`m| H$mo gr{_V _mÌm _| d{Hª$J H¡${nQ>c Mm{hE bo{H$Z
relating to public utilities have a limited need ñWm`r AgoQ²>g _| CÝh| ~‹S>r _mÌm _| YZ bJmZm n‹S>Vm h¡&
for working capital but they are required to
invest large sum in fixed assets.
Similarly, size of the business also has an Bgr àH$ma, d{Hª$J H¡${nQ>c H$s Amdí`H$Vm na {~OZog
important effect on working capital needs. If Ho$ AmH$ma H$m ^r _hËdnyU© à^md n‹S>Vm h¡& `{X {~OZog
the size of the business is large, it will need H$s gmBO ~‹S>r h¡ Vmo Cgo N>moQ>o \$_© H$s VwbZm _| A{YH$
more working capital than a small firm. d{Hª$J H¡${nQ>c H$s Amdí`H$Vm hmoJr&

2. Volume of sales: The working capital 2. {dH«$` H$s _mÌm… {dH«$` H$s _mÌm ~XbZo na ^r
need of the firm also increases with its sales d{Hª$J H¡${nQ>c H$s Amdí`H$Vm ~‹T>Vr h¡& h_ {~H«$s Ho$
volume. We can not exactly determine the re- AmH$ma Am¡a d{Hª$J H¡${nQ>c H$s Amdí`H$Vm Ho$ ~rM g§~§Y
lationship between volume of sales and work-
ing capital needs. Therefore, it is necessary to H$mo ghr-ghr {ZYm©[aV Zht H$a gH$Vo& AV… EH$
make advance planning of working capital for {dH$mgerb \$_© Ho$ {bE d{Hª$J H¡${nQ>c g§~§Yr `moOZm
a growing firm. nhbo go ~Zm boZm Amdí`H$ h¡&
When a firm invests funds in fixed assets O~ H$moB© \$_© {~H«$s Am¡a CËnmXZ ~‹T>mZo hoVw {\$ŠñS>
in order to increase sale and production, it will AgoQ²>g _| \§$S> BÝdoñQ> H$aVr h¡ Vmo dh H$aÝQ> AgoQ²>g _|
increase investment in current assets also. ^r BÝdoñQ>_|Q> ~‹T>mEJr& AÝ`Wm Eogr \$_© Ho$ gm_Zo
Otherwise such a firm faces financial problems \$m`ZopÝe`c àm°ãc_ AmE±Jr Am¡a dh eo`ahmoëS>g© H$mo
and it would not be able to pay dividend to
shareholders. It is therefore, necessary to make {S>{dS>oÝS> Zht Xo nmEJr& AV… Eogr \$_© H$mo d{Hª$J H¡${nQ>c
proper planning by such companies to satisfy H$s Amdí`H$VmAm| H$s ny{V© Ho$ {bE nhbo go `moOZm ~ZmZm
the needs for working capital. Amdí`H$ h¡&
3. Condition of demand: Generally, there 3. {S>_m§S> H$s pñW{V… gm_mÝ`V… dñVwAm| Am¡a
is a fluctuation in the demand of the products godmAm| H$s {S>_m§S> _| n[adV©Z hmoVm ahVm h¡& {~OZog _|
and services. Due to variation in business, the
demand for working capital will also increase. CVma-M‹T>md Ho$ H$maU d{Hª$J H¡${nQ>c H$s {S>_m§J _| ^r
The firm's investment in stock and debtors d¥{Õ hmoVr h¡& \$_© H$m ñQ>m°H$ Am¡a CYma ImVm| _| BÝdoñQ>_|Q>
will also increase. If the additional investment ^r ~‹T> OmVm h¡& `{X ñWm`r AgoQ²>g _| A{V[aº$ BÝdoñQ>_|Q>
in fixed assets is made, the working capital {H$`m OmVm h¡ Vmo d{Hª$J H¡${nQ>c Amdí`H$Vm ^r ~‹T>oJr&
requirement will also increase. On the other Xÿgar Amoa `{X AW©ì`dñWm _| {JamdQ> AmVr h¡ Vmo
hand, if there is a decline in economy, the sales
will fall and so the level of stock and debtors {dH«$` ^r H$_ hmoJm Am¡a ñQ>m°H$ VWm CYma ImVm| H$m
will also fall. ñVa ^r ZrMo OmEJm&
Such type of fluctuations in economy will AW©ì`dñWm _| Bg àH$ma H$m n[adV©Z d{Hª$J H¡${nQ>c
not only affect the working capital requirement H$s Amdí`H$Vm H$mo hr à^m{dV Zht H$aoJm ~pëH$ \$_© Ho$
but also create production problems for the
gm_Zo CËnmXZ g§~§Yr g_ñ`mE± ^r I‹S>r H$aoJm&
firm.