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Subjects

Business Studies

Working capital

This Class 12 Business Studies topic explains working capital as the funds required for a business’s day-to-day operations. As part of Financial Management, students learn how current assets such as cash, inventory and receivables are balanced against current liabilities like payables and short-term obligations. The topic connects working capital with the operating cycle, liquidity and profitability, and helps students understand how factors such as the nature of business, production cycle, credit policy and business growth influence its requirements.

Medium · Level 1 · 3 questions

Practice questions

01An entrepreneur has limited funds but must maintain quality. Which decision is most balanced?

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Answer and explanation

02What should an entrepreneur do first when raw-material prices suddenly increase?

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Answer and explanation

03Why is understanding cash flow important in a small venture?

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