MANAGEMENT

Detailed explanation-1: -The type of business Co. is involved in is the first factor which helps in deciding the requirement of fixed capital. A manufacturing company needs more fixed capital as compared to a trading company, as trading company does not need plant, machinery, etc.

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: -Nature of business determines working capital requirement Hence, the trading concern requires more amount working capital. In the case of service organization, large number of fixed assets are required and the services are rendered only on cash basis. Credit is allowed only to some extent and short period.

Detailed explanation-4: -Funds are required to purchase fixed assets such as land and buildings as well as plants and machinery, in order to start a firm. The capital required for fixed assets are invested in the company for a long time is a fixed capital requirement.

Detailed explanation-5: -Fixed capital are assets of a business that are permanent in nature and are not intended to be disposed of by a business. These assets include land, buildings, plant, machinery, fixed equipment, furniture, fixtures, vehicles, livestock, etc.