What are the three main types of working capital based on time?

Permanent Working Capital, Temporary Working Capital, and Semi Variable Working Capital.

Fill in the blank: Permanent Working Capital is also known as ___ and is essential for maintaining a minimum level of capital at all times.

Fixed Working Capital.

Explain the difference between Seasonal Working Capital and Special Working Capital.

Seasonal vs Special Working Capital

• Seasonal meets demand peaks.

• Special funds specific projects.

• Both support business operations.

True or False: Inadequate working capital can lead to the inability to buy raw materials in bulk.

True.

What factors determine the working capital requirements of a business?

Working capital depends on various factors.

• Business nature impacts needs.

• Production cycle affects cash flow.

• Credit policy influences liquidity.

Riddle: I am a type of working capital that changes with the seasons. What am I?

Seasonal Working Capital.

What is the conservative approach in working capital management?

The conservative approach involves financing all current assets with long-term sources and using short-term sources only for emergencies.

Fill in the blank: Excessive working capital can lead to ___ of raw materials and components.

Unnecessary accumulation.

How does the production cycle affect working capital requirements?

A longer production cycle requires more working capital to cover the extended time from raw material acquisition to product sales.

What is the aggressive working capital policy?

Aggressive working capital policy defined.

• Uses short-term financing methods.

• Involves higher risk for returns.

• Targets increased profitability potential.

True or False: The percent of sales method estimates working capital based only on future sales projections.

False. It estimates working capital based on the historical relationship between sales and working capital needs.

What are the sources of working capital?

Sources can be internal, such as retained earnings and depreciation funds, or external, such as loans from banks and public deposits.

How does a company's credit policy influence its working capital?

A liberal credit policy requires more working capital to manage delayed payments from customers, while a strict policy may require less.

Riddle: I help businesses pay their daily expenses like salaries and supplies. What am I?

Working Capital.

What are the three main types of working capital classified based on time?

The three main types of working capital are Permanent Working Capital, Temporary Working Capital, and Semi-Variable Working Capital.