1.

Factors influencing determinants of working capital

Nature of business: Working Capital of the business concerns largely depend upon the nature of the business. If
the business concerns follow rigid credit policy and sell goods only for cash, they can maintain lesser amount of
Working Capital. A transport company maintains lesser amount of Working Capital while a construction
company maintains larger amount of Working Capital. 2. Production cycle: Amount of Working Capital depends
upon the length of the production cycle. If the production cycle length is small, they need to maintain lesser
amount of Working Capital. If it is not, they have to maintain large amount of Working Capital. 3. Business cycle:
Business fluctuations lead to cyclical and seasonal changes in the business condition and it will affect the
requirements of the Working Capital. In the booming conditions, the Working Capital requirement is larger and
in the depression condition, requirement of Working Capital will reduce. Better business results lead to increase
the Working Capital requirements. 4. Production policy: It is also one of the factors which affects the Working
Capital requirement of the business concern. If the company maintains the continues production policy, there is
a need of regular Working Capital. If the production policy of the company depends upon the situation or
conditions, Working Capital requirement will depend upon the conditions laid down by the company. 5. Credit
policy: Credit policy of sales and purchase also affect the Working Capital requirements of the business concern.
If the company maintains liberal credit policy to collect the payments from its customers, they have to maintain
more Working Capital. If the company pays the dues on the last date it will create the cash maintenance in hand
and bank. 6. Growth and expansion: During the growth and expansion of the business concern, Working Capital
requirements are higher, because it needs some additional Working Capital and incurs some extra expenses at
the initial stages 7.Availability of raw materials: Major part of the Working Capital requirements are largely
depend on the availability of raw materials. Raw materials are the basic components of the production process.
If the raw material is not readily available, it leads to production stoppage. So, the concern must maintain
adequate raw material; for that purpose, they have to spend some amount of Working Capital. 8. Earning
capacity: If the business concern consists of high level of earning capacity, they can generate more Working
Capital, with the help of cash from operation. Earning capacity is also one of the factors which determines the
Working Capital requirements of the business concern.
2.(OPERATING CYCLE/WORKING CAPITAL CYCLE)
Working Capital requirements depend upon the operating cycle of the business. The operating cycle begins with
the acquisition of raw material and ends with the collection of receivables. The time elapses between the
purchase of raw materials and the collection for sale is referred to as the operating cycle. The operating cycle is
the sum of the inventory period and the account receivable period. Operating cycle consists of the following
important stages: 1. Raw Material and Storage Stage, 2. Work in Process Stage, 3. Finished Goods Stage, 4.
Debtors Collection Stage, 5. Creditors Payment Period Stage.
3.(Techniques of inventory control.)
1. Economic order quantity.Economic order quantity, or EOQ, is a formula for the ideal order quantity a
company needs to purchase for its inventory with a set of variables like total costs of production, demand rate,
and other factors. The overall goal of EOQ is to minimize related costs. The formula is used to identify the
greatest number of product units to order to minimize buying. The formula also takes the number of units in the
delivery of and storing of inventory unit costs. This helps free up tied cash in inventory for most companies. 2.
Minimum order quantity. On the supplier side, minimum order quantity (MOQ) is the smallest amount of set
stock a supplier is willing to sell. If retailers are unable to purchase the MOQ of a product, the supplier won’t sell
it to you. For example, inventory items that cost more to produce typically have a smaller MOQ as opposed to
cheaper items that are easier and more cost effective to make. .3. ABC analysis. This inventory categorization
technique splits subjects into three categories to identify items that have a heavy impact on overall inventory
cost. • Category A serves as your most valuable products that contribute the most to overall profit. • Category B
is the products that fall somewhere in between the most and least valuable. • Category C is for the small
transactions that are vital for overall profit but don’t matter much individually to the company altogether. 4.
Just-in-time inventory management. Just-in-time (JIT) inventory management is a technique that arranges raw
material orders from suppliers in direct connection with production schedules. JIT is a great way to reduce
inventory costs. Companies receive inventory on an asneeded basis instead of ordering too much and risking
dead stock. Dead stock is inventory that was never sold or used by customers before being removed from sale
status.
4.(Features of Venture Capital )The main attributes of venture capital can be summarized as follows.
 Equity participation Venture financing is actual or potential equity participation through direct purchase
of shares, options or convertible securities. The objective is to make capital gains by selling-off the
investment, once the enterprise becomes profitable.
 Long-term investment Venture financing is a long-term, illiquid investment; it is not repayable on
demand. It requires long-term investment attitude that necessitates the venture capital firms (VCFs) to
wait for a long period, say 5—10 years, to make large profits.
 Participation in management Venture financing ensures continuing participation of the venture
capitalist in the management of the entrepreneur's business. This hands-on management approach
helps him to protect and enhance his investment by actively involving and supporting the entrepreneur.
More than finance, venture capitalist gives his marketing, technology, planning and management skills
to the new firm.

5.[Economic value added(EVA)]

introduction Economic value added (EVA) is a measure of a company's financial performance based on the
residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a
cash basis. EVA can also be referred to as economic profit, as it attempts to capture the true economic profit
of a company.

Meaning of EVA. Economic value added (EVA) is a financial measurement of the return earned by a firm
that is in excess of the amount that the company needs to earn to appease shareholders. In other words, it
is a measure of an organization’s economic profit that takes into account the opportunity cost of invested
capital and ultimately measures whether organizational value was created or lost.

6.( What is a Balanced Scorecard?)

The balanced scorecard (BSC) is a strategic planning and management system. Organizations use BSCs to: •
Communicate what they are trying to accomplish • Align the day-to-day work that everyone is doing with
strategy • Prioritize projects, products, and services • Measure and monitor progress towards strategic
targets The name “balanced scorecard” comes from the idea of looking at strategic measures in addition to
traditional financial measures to get a more “balanced” view of performance.

The concept of balanced scorecard has evolved beyond the simple use of perspectives and it is now a
holistic system for managing strategy. A key benefit of using a disciplined framework is that it gives
organizations a way to “connect the dots” between the various components of strategic planning and
management, meaning that there will be a visible connection between the projects and programs that
people are working on, the measurements being used to track success (KPIs), the strategic objectives the
organization is trying to accomplish, and the mission, vision, and strategy of the organization.

(What Is Forex(foreign Exchange market) Market? )

The Forex market allows participants, including banks, funds, and individuals, to buy, sell or exchange
currencies for both hedging and speculative purposes is called as FOREX Market. The participants in the
foreign exchange market comprise; (i) Corporate. (ii) Commercial banks (iii) Exchange brokers (iv) Central
banks.
(Spot Exchange Rates: )It is the current price level in the market to directly exchange one currency for another,
for delivery on the earliest possible value date. The spot exchange rate is the amount one currency will trade for
another today. – In other words, it’s the price a person would have to pay in one currency to buy another
currency today.
(Bid-Ask Rate) It refers to the highest price a buyer will pay for a security. The ask price refers to the lowest
price a seller will accept for a security. The difference between these two prices is known as the spread; the
smaller the spread, the greater the liquidity of the given security