Financial Management — Business Studies STD 12 Commerce — Question
CBSE BoardEnglish MediumSTD 12 CommerceBusiness StudiesFinancial Management1 Mark
Question
What is the relationship between inflation and working capital requirement?
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Answer
Inflation means rise in prices. In such a situation, more capital is required than before in order to maintain the previous scale of production and sales. Therefore, with the increasing rate of inflation, there is a corresponding increase in the working capital.
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