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3. Gestation Period: When there is large time gap between the beginning and ending of a
manufacturing process, more working capital is required. A smaller gestation period requires
comparatively small working capital.
4. Volume and procurement of raw material: If the nature of the business is such that more
capital need to be invested on the raw materials, it requires huge capital amount. When the cost
of raw material is low, it requires small amount of working capital.
5. Manual v/s Automation: Compared to an automated business, a business where in more man
power is needed requires more working capital.
6. Need to stock up inventories: When the nature of the business requires more amount of raw
materials/stock to be maintained in inventory, it requires more working capital. If the inventory
is low, the working capital is also low.
7. Turnover of working capital: When the turn over is more, the working capital is recovered at a
faster rate from the sale of finished goods. So, it requires less working capital compared to the
business where in the turnover is less.
8. Terms of Credit: When the business has to sell the goods on credit, the investments are locked
up in the form credit with the buyers(clients or customers). Hence it requires more working
capital compared to a business that sells on cash.

Fixed Capital Requirement
Fixed capital refers to the capital that is required for meeting the permanent or long term needs
of the business. Fixed capital exists in the form of investment made in fixed assets like land,
building, plant and machinery etc.
Factors need to be considered while planning the fixed capital requirements:

The following factors should be considered while planning for the fixed capital requirements.
1. Nature of the business: The amount of fixed capital depends on whether the business is
trading or manufacturing or service oriented.
2. Size of the business: Large business requires large fixed capital and small business
requires small fixed capital.
3. Technology used in the production: The more the sophisticated the technology, the
more the requirement for the fixed capital. On the otherhand if the business is labour
intensive, then the amount of fixed capital required might be less.
4. Range of production: If the business deals with diversified range of products (the
number of products is more), then more fixed capital is needed. On the otherhand if the
business deals with a single or less number of products, less fixed capital is needed.
5. Type of product manufactured: If the product is more complex (like a car or computer),
it requires more complicated machinery and hence more is the fixed cost. On the
otherhand, if the product manufacture is simple (like a mobile phone case), the fixed
capital required is less.
6. Method of acquisition of fixed assets: When the business decides to buy the fixed
assets, the fixed capital required is more. On the other hand, if the business decides to
hire or lease the fixed assets, the fixed capital requirement is comparatively lesser.