Seasonal variations and size of business, Managerial Accounting

Seasonal Variations: Commodities along with seasonal demand results in raised level of working capital requirement. It could be offset through scaling down operations throughout the lean part of the year and raising production prior to demand period. Products manufactured along with raw materials, the production of that is seasonal agricultural products would necessitate higher amount of working capital.

Size of Business: Size of the firm is as well a finding factor in estimating working capital needs. The size of a firm might be measured either in terms of scale of assets, or sales or operations. Large firms need additional amount of working capital for investment in current assets as well as to pay current liabilities than slighter firms. Though, in some cases even a small firm may require more working capital like a cushion against cash flow interruptions.

Posted Date: 4/9/2013 3:00:55 AM | Location : United States

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