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BRILLIANT’S Working Capital Management 131

6. Change in price level: Change in price 6. _yë` ñVa _| n[adV©Z… _yë` ñVa _| n[adV©Z go
level also creates problems to the financial ^r \$m`ZopÝe`b _¡ZoOa Ho$ gm_Zo g_ñ`m I‹S>r hmo OmVr
manager. If the level of price is increasing, the h¡& `{X _yë` ñVa ~‹T> ahm h¡ Vmo d{Hª$J H¡${nQ>c H$s
requirement of working capital will also Amdí`H$Vm ^r ~‹T>oJr& bo{H$Z `{X \$_© _yë` ñVa _| d¥{Õ
increase. But if the firm can revise its rate
immediately with increase in price level, it will Ho$ gmW VËH$mb AnZr Xa| g§emo{YV H$a bo Vmo d{Hª$J
not face the serious working capital problems. H¡${nQ>c H$s BVZr J§^ra g_ñ`m Zht AmEJr& `h ^r g§^d
It is also possible that some companies will not h¡ {H$ Hw$N> H$ån{Z`m| na _yë` d¥{Õ H$m Aga Z n‹S>o O~{H$
be affected by rise in prices while others may be AÝ` na H$m\$s ~wam à^md n‹S>o& {^Þ-{^Þ H$ån{Z`m| na
badly affected by it. The effect of change in price `h à^md {^Þ-{^Þ hmoJm& Hw$N> Ho$ gm_Zo d{Hª$J H¡${nQ>c
level will be different for different companies.
Some will face no working capital problem but H$s J§^ra g_ñ`m hmoJr {H$ÝVw AÝ` Ho$ gm_Zo hmo gH$Vm h¡
others may face hardships.. H$moB© g_ñ`m Z AmEŸ&
7. Efficiency and performance: The 7. B{\${eE§gr Am¡a na\$m°_}Ýg: d{Hª$J H¡${nQ>c
pressure of working capital is also affected by H$s Amdí`H$Vm Bggo ^r à^m{dV hmoVr h¡ {H$ CgH$m
the fact that how efficiently it is utilized. The Cn`moJ {H$VZr XjVm go {H$`m OmVm h¡& \$_© H$s XjVm
efficiency of the firm is related with utilization
of resources at the minimum costs. Different H$m gå~ÝY Ý`yZV_ H$m°ñQ> na g§gmYZm| Ho$ Cn`moJ go h¡&
firms have different profit earning capacity. {^Þ-{^Þ g§ñWmAm| H$s bm^ AO©Z j_Vm {^Þ hmoVr h¡&
There are some firms which earn higher profit Hw$N> g§ñWmE± A{YH$ bm^ H$_mVr h¢ Š`m|{H$ CZHo$ CËnmX
because they have quality product, good H$s JwUdÎmm Am¡a _mH}$qQ>J _¡ZoO_|Q> AÀN>m hmoVm h¡ VWm
marketing management and monopoly in the ~mOma _| _moZmonm°br CZHo$ nmg hmoVr h¡& O~{H$ H$B© g§ñWmE±
market. On the other hand, there are many
firms which face competition and so they earn à{VñnYm© H$m gm_Zm H$aVr h¢¡ Bg{bE CZHo$ bm^ H$m
low margin of profits. ñVa H$_ ahVm h¡&
Even if a company earns higher net profit, ^bo hr H$moB© H$ånZr A{YH$ ZoQ> àm°{\$Q> H$_mE V~ ^r
the whole amount will not be available for CgH$s nyar am{e d{Hª$J H¡${nQ>c Ho$ {bE CnbãY Zht hmoJr&
working capital purpose. If the dividend is paid `{X {S>{dS>oÝS> CÀM Xa na {X`m OmVm h¡ Vmo d{Hª$J H¡${nQ>c H$m
at higher rate, the working capital fund will
\§$S> H$_ hmo OmEJm& \$_© AnZr d{Hª$J H¡${nQ>c H$mo g§Vw{bV
reduce. A firm can increase its working capital
by a balanced dividend policy and tax planning. {S>{dS>oÝS> nm°{cgr Am¡a Q>¡Šg ßcmqZJ go ~‹T>m gH$Vr h¡&
8. Change in technology: Due to changes 8. Q>oŠZmobm°Or _| n[adV©Z… Q>oŠZmobm°Or _| n[adV©Z
in technology, generally there is improvement Ho$ H$maU gm_mÝ`V… H$ÀMo _mb H$s àmogoqgJ Ho$ {gñQ>_ _|
in the system of processing raw material, gwYma hmoVm h¡, doñQ>oO _| H$_r AmVr h¡, CËnmXZ H$s J{V
decrease in wastages, increase in production
and higher productivity is achieved by ~‹T>Vr h¡ Am¡a Am°Q>mo_oeZ Ho$ H$maU CÀM CËnmXH$Vm àmá
automation. As a result, the need for investment hmoVr h¡& n[aUm_ñdê$n BÝdoÝQ>arO _| BÝdoñQ>_|Q> H$s
in inventories is reduced which, in turn, leads Amdí`H$Vm H$_ hmo OmVr h¡ {Oggo d{Hª$J H¡${nQ>c H$s
to reduction in working capital requirement. If
Amdí`H$Vm _| ^r H$_r AmVr h¡& `{X Q>oŠZmobm°Or _| n[adV©Z
the manufacturing process cycle is reduced by
change in technology, it will also reduce the Ho$ H$maU _¡Ý`y\o$ŠM[a¨J àmogog gm`H$b H$_ hmo OmE V~
requirement of working capital. ^r d{Hª$J H¡${nQ>c H$s Amdí`H$Vm H$_ hmoJr&