Factor affecting the requirements of working capital
- Production cycle: Production cycle is the time span between the receipt of raw material and their conversion into finished good
- seasonal Factors: Most business have some seasonality in their operations. In peak season, because of higher level of activity, larger amount of working capital is required
- credit allowed: Different firms allow different credit terms to their customers. These depend upon the level of competition that a firm faces as well as the credit worthiness of their clientele.
Factor affecting the requirements of fixed capital
- Diversification: A firm may choose to diversify its operations for various reasons, With diversification, fixed capital requirements increase