Register now or log in to join your professional community.
Thanks for invitation,
Agree with the answer of Mr. Frank Mwansa, since it depends on lot of factors, for example,
- The Industry and the technology used.
- The degree of the development in the society.
- The Organization's "Credit Policy".
- The Organization's "Collection Policy".
- The Organization's "Cash Management" efficiency.
-
Thanks for invitation
Working capital is a daily necessity for business because they require a regular amount of cash to make routine payment cover unexpected cost and purchase basic materials used in production of goods. However, the needs of working capital vary from industry to industry and they can even vary among similar companies. This is because of several factors. Eg differences collecting and payment policies, timing of asset purchases, the likelihood of a co writing off some of its past account receivable and capital raising capacity. As such the development of working capital requirements are not the same between the two industries.