Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:

Tanya is a CEO of a readymade garments business. Currently her business is at its boom and her sales are also very high. What would be the requirement of working capital in her business in current scenario ?

Options:

Low

High

Stable/Uniform throughout the year

Very Low

Correct Answer:

High

Explanation:

The correct answer is option (2) : High

In a scenario where a business is at its boom, experiencing high sales, and likely dealing with increased operational activities, the requirement for working capital would typically be '12. High."

High sales and increased business activities often require higher working capital to finance the day-to-day operations, manage increased inventory, and meet the demands of a growing customer base. Working capital provides the liquidity necessary to cover expenses, pay suppliers, and sustain operations during period of high  activity.