Question

Q. Explain with reason which of the following business will require large amount of working capital and which one will require lesser working capital
(a) Ice -cream seller (b) sugar factory (c) Backery
​(d) Automobile company (e) Garment factory (f) Grocery shop

Answer 1

Dear student,
a) Ice-cream seller: Working capital requirements would be low as the sale transaction takes place immediately.
b)Sugar factory: Working capital requirements would be high as the raw materials should first be converted to final output before they are sold.
c) Bakery: Working capital requirements would be high as the raw materials should first be converted to final output before they are sold.
d) Automobile company: Working capital requirements would be high as the raw materials should first be converted to final output before they are sold.
e) Garment factory: Working capital requirements would be high as the raw materials should first be converted to final output before they are sold

f) Grocery shop: Working capital requirements would be low as the sale transaction takes place immediately.