SELECT * FROM question_mgmt as q WHERE id=5255 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=20 AND chapterId=598 and ex_no='1' AND status=1 ORDER BY CAST(question_no AS UNSIGNED) CBSE Free NCERT Solution of 12th business-studies Financial Management ramnath is into the business of assembling and sel

Question:

Ramnath is into the business of assembling and selling of televisions. Recently he has adopted a new policy of purchasing the components on three months credit and selling the complete product in cash. Will it affect the requirement of working capital? Give reason in support of your answer.

Answer:

Working capital means the capital invested in current or working assets such as stock of materials and finished goods, accounts receivable, bills receivable, short-term securities and cash or bank balance for meeting day-to-day expenses.

In the above case Ramnath purchasing the components on three month credit and selling the product in cash. In this situation the requirement of working capital will be reduced to the extent of credit he availed.


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