Question

Amar is doing his transport business in Delhi. His buses are generally used for the tourists going to Jaipur and Agra. Identify the working capital requirement of Amar giving reason in support of your answer. Further Amar wants to expand and diversify his Transport business. Enumerate any four factors that will affect his fixed capital requirements.

Answer 1

Working capital requirements of Amar would be less as it is a SERVICE industry.

Factors which will affects his fixed capital requirements are:

1. Scale of operations

2. Financing alternatives

3. Growth prospects

4. Diversification