For the successful running of a business, it is necessary to determine the amount of working
capital. Do you agree? If yes, then give reasons in support of your answer.
Yes the statement is true, as a proper amount is required to meet the daily expenditures of business and thus, working capital is necessary to determine. Working capital is that portion of fund which is used to conduct day-to-day operations.
The reasons on the basis of this reference are
(i) Prosperity and progress of the projects can be maintained by adequate working capital.
(ii) Adequate working capital enables a firm to improve the efficiency and profitability of its operations.
(iii) It is also required to channelize the day-to-day operations. That’s why it is also called circulating or revolving capital.