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Business Studies

Factors Affecting Fixed and Working Capital

State three r...

Question

State three reasons of calling raw material and money as working capital.

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Solution

Raw material and money are known as working capital because they can be used only once and unlike machinery and tools cannot be used over and again in the production process.

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Q. Raw materials and money are referred to as working capital.

Q. Raw material and money in hand are examples of ________ capital.

Q. If raw materials are easily available and there is a ready supply of raw materials and inputs then firms can manage with less amount of working capital also as they need not maintain any stock of raw materials. State true or false.

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