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Dividend Policy

Dividend Policy Another appropriation of profits which has a hearing on working capital is dividend payment. The payment of dividend consumes cash resources and, thereby, affects working capital to that extent. Conversely, if the firm does not pay dividend the retains...

Growth and Expansion

Growth and Expansion As a company grows, it is logical to expect that a larger amount of working capital is required. It is, of course, difficult to determine precisely the relationship between the growth on the volume of business of a company's and the increase in...

Credit Policy

Credit Policy The credit policy relating to sales and purchases also affects, the working capital. The credit policy influences the requirement of working capital in two ways: (i) through credit terms granted by the firm to its customers buyers of goods; (ii) credit...

Production Policy

Production Policy The quantum of working capital is also determined by production policy. In case of certain lines of business, the demand for products is seasonal, that is, they are purchased during certain months of the year. What kind of production policy should be...