Question

State whether the working capital requirement of business manufacturing the following items are big or small. Justify your answer:-
(i) Bread (ii) Coolers
(iii) Sugar (iv) Furniture
(v) Motor Car (v) Locomotives

Answer 1

(i)- Bread- a requirement of working capital will be less because it has quick cash turnover.

(ii)- coolers- working capital requirement will be more as it is a seasonal product.

(iii)- sugar- working capital required for manufacturers will be more as a ration of raw material cost to total cost is more.

(iv)- Furniture- less amount of working capital needed as it doesn't require large stock.

(v)- motor car- requires more capital as the gestation period is more.

(vi)- locomotives- requires more capital as the gestation period is more in compare with motor car.