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Factors affecting Fixed and working Capital requirement Worksheet
Chapter -9 Financial Management
📝 Instructions: For each scenario, decide whether the factor would lead to MORE or LESS capital requirement. Select your answer and click Submit to see your results!
⚠️ All 20 questions are compulsory. You must answer every question before submitting.
Question 1: Factors Affecting Fixed Capital Requirement
1. A manufacturing company decides to use highly automated machinery instead of manual labor.
2. A business chooses to lease its factory building rather than purchasing it.
3. A company operates in a large-scale industry requiring extensive infrastructure.
4. A firm decides to establish its operations in a metropolitan city with high land costs.
5. A startup adopts a labor-intensive production technique instead of capital-intensive methods.
6. A business plans to expand its production capacity by 200%.
7. A company invests in advanced technology and modern equipment for better efficiency.
8. A firm operates in a service industry like consulting rather than manufacturing.
9. A business requires extensive research and development facilities.
10. A company decides to outsource its production instead of setting up its own plant.
Question 2: Factors Affecting Working Capital Requirement
1. A retail business extends credit period to customers from 30 days to 90 days.
2. A company negotiates longer credit terms with suppliers (from 30 to 60 days).
3. A business experiences rapid growth and expansion in sales volume.
4. A seasonal business needs to maintain high inventory during peak season.
5. A company implements Just-In-Time (JIT) inventory management system.
6. A manufacturing firm has a long production cycle of 6 months.
7. A business operates on a cash-only basis with no credit sales.
8. A company faces increased competition and must maintain higher stock levels.
9. Raw material prices increase significantly in the market.
10. A business improves its inventory turnover ratio from 4 to 8 times per year.
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