You may not know what a capital structure is or why you should even concern yourself with something that sounds so technical but rest assured that the concept is extremely important because it can influence not only the return a company earns for its shareholders but whether or not a firm survives in a recession or depression sit back, relax . The requirements of working capital are not uniform in all enterprises, and therefore, factors responsible for a particular size of working capital in one company are different than in other enterprisetherefore, a set pattern of factors determining the optimum size of working capital is difficult to suggest. Various factors affect the composition of your working capital availability of raw materials availability of raw materials affects the composition of the working capital. Factors influencing working capital requirements there are a number of factors influencing the working capital requirements of a company these elements have a considerable extent of impact on the short-term performance of a firm.
However, the following are considered some of the important factors that generally influence requirement for working capital factors determining working capital requirements 1. Factors affecting working capital requirements the seasonal variations also influence the working capital: additional factors influencing working . Working capital requirements and the determining factors in pakistan 29 of the company relating to vendors, customers and products (hall, 2002). Apart from the above points, some other factors also affect the working capital requirements for example, lack of transport and communication facilities, tariff policies of government etc also influence the requirements of working capital.
Proper management of working capital is essential to a company’s fundamental financial health and operational success as a business a hallmark of good business management is the ability to . Get an answer for 'explain the concept of working capital' and find homework help for other business questions at enotes. Factors affecting working capital it is the general concept it is the capital invested in total current assets of the business concern gross working capital is .
Huynh ngoc trinh influence of working capital management on company profitability 3 abstract shin and soenen (1998) cited that the efficiency of working capital management has a. Explain the concept of working capital explain the various factors which influence working capital the concept of capital maintenance is concerned with how an enterprise defines the . Capital market condition-in the lifetime of the company, the market price of the shares has got an important influence during the depression period, the company’s capital structure generally consists of debentures and loans. The purpose of this paper is to examine the factors that determine the working capital requirements of firms in malaysia focusing on enterprise 50 (e50) firms e50 is an annual awards program initiated by government and organized by sme corporation.
Working capital is one of the most difficult financial concepts for the small-business owner to understand in fact, the term means a lot of different things to a lot of different people by . Concept of working capital factors influencing working capital requirement numerous factors can influence the size and need of working capital in a concern so no set rule or formula. Factors determining capital structure trading on equity- the word “equity” denotes the ownership of the company trading on equity means taking advantage of equity share capital to borrowed funds on reasonable basis. Capital budgeting usually involves calculation of each project’s future accounting profit by period, the cash flow by period, the present value of cash flows after considering time value of money, the number of years it takes for a project’s cash flow to pay back the initial cash investment, an assessment of risk, and various other factors.
Working capital requirement is influenced by various factors in fact, any and every activity of a company affects the working capital requirements of the company the magnitude of influence may be different. The requirement of working capital depends on the nature of business the nature of business is usually of two types: manufacturing business and trading business in the case of manufacturing business it takes a lot of time in converting raw material into finished goods therefore, capital remains .
Define working capital and explain the factors which determine the amount of working capital working capital or circular capital or floating capital :- working capital is the amount of fund which is converted in current assets of a business. 15 explain the concept of overtrading and its application 54 types of working capital ratios (dec and explain the factors that influence the optimum cash . 70 chapter 3 short-term ﬁnance and the management of working capital long-term investment and ﬁnancing decisions give rise to future cash ﬂows which, when discounted by an appropriate cost of capital, determine the market value of a company.