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 Tanya's case, since her business is experiencing a boom and high sales, the requirement for working capital would likely be High.

When sales increase, the business will need more working capital to support the higher levels of inventory, production, and accounts receivable. The business must ensure that it can meet its short-term obligations, such as paying suppliers, employees, and other operational costs, while also having enough funds to manage the increased demand.