Q. Rate of the growth of the business?

The working capital requirement of the a concern increase with the growth and expansion of the business activity although it is difficult to determine the relation of the business and growth in the volume of the business and the growth in the working capital of the business and growth in the volume of the business and the growth in the business and the growth in the business. yet it may be concluded that for the normal rate of the expansion in the volume of the business, we may have retained the profit to provide the retention of the business but in the fast going concern we shall require large amount in the working capital requirement Earning capacity and the dividend policy: some firms have the more earning capacity other than other firms due to their quality of their products , monopoly condition . Such firms having high earning capacity may generate cash profit from the operation and contribute their working capital . the dividend policy of concern also influence the requirement of its working capital.