Question

Radhika and Vani who are young fashion designers left their jobs with a famous fashion designer chain to set-up a company 'Fashionate Pvt. Ltd.' They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening. For the coaching centre they hired the first floor of a nearby building. Their major expense was money spent on photocopying of notes for their students. They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.
In the basement of the building of 'Fashionate Pvt. Ltd.' Praveen and Ramesh were carrying on a printing and stationery business in the name on 'Neo Prints Pvt. Ltd.' Radhika and Praveen with the proposal to buy a photocopier jointly which could be used by both of them withous making separate investment, Praveen agreed to this.
Identify the factor affecting capital requirements of 'Fashionate Pvt. Ltd.'

Answer 1

The factor affecting the fixed capital requirements of 'Fashionate Pvt. Ltd.' is level of collaboration. At times, business organisations undergo collaboration with each other and jointly establish certain facilities. In such case, an individual organisations requirement for fixed capital reduces.