Question

In case of trading concern or retail shop the requirement of working capital is less because length of operating cycle is small.

• A. True
• B. False

Answer 1

The correct option is A True

In case of trading concern or retail shop the requirement of working capital is less because length of operating cycle is small. The wholesalers as compared to retail shop require more working capital as they have to maintain large stock and generally sell goods on credit which increases the length of operating cycle.

Therefore in case of retail shop, generally prompt payment is done so don't have to maintain high level of stock hence small operating cycle.