Factors that affect ‘working capital’ management

Top factors that affect ‘working capital’ management.

Working capital is refers to the capital that a business uses for its day-to-day trading operations. It’s calculated as current assets minus current liabilities.

Here we take a look at the various factors that has an impact on the working capital. Depending on these factors (that applies to the business), a company may require less or more working capital for conducting its business smoothly.

Nature of the Business / Industry
Seasonal Factors
Length of the Production Cycle
Scale of Operations / Growth Prospects
Credit Policy
Level of Competition
Operating Efficiency
Availability of Raw Material
Inflation

Management / MBA question on this topic:

Miss Ninna is planning to open a boutique at link road. Her financial advisor says that its essential to take care and manage well the working capital, as it ensures smooth running of the operating cycle of business. However, there are various factors which affects the working capital management. If you being the financial advisor of Miss Ninna, discuss those factors in detail.

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