BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Companies using capital-intensive techniques require more fixed capital whereas companies using labour-intensive techniques require less capital because capital-intensive techniques make use of plant and machinery and company needs more fixed capital to buy plants and machinery.

Detailed explanation-2: -Ans : There are many factors affecting fixed capital. Some include diversification, joint ventures, growth prospects, and production techniques. Ans : Some of the factors that affect working capital include the nature of the business, operating efficiency, availability of raw materials, and competition level.

Detailed explanation-3: -(ii) Scale of operations: A large scale enterprise generally requires greater fixed capital than a small scale enterprise. e.g. a large scale steel enterprise like Tata Iron and Steel Company requires massive investment in fixed assets in comparison with a small toy manufacturing unit.

Detailed explanation-4: -Low working capital can often mean that the business is barely getting by and has just enough capital to cover its short-term expenses. However, low working capital can also mean that a business invested excess cash to generate a higher rate of return, increasing the company’s total value.