I have this doubt in working capital..
Working capital is required at 10% of annual sales.
If suppose the sales are in current terms and we inflate it using the general rate of inflation given, why do we calculate working capital on the inflated sales revenue?
Why is inflation included in working capital?
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DARN CO- Investment Appraisal
4y ago#1Because working capital is the amount needed to finance receivables etc., if the sales increase then the working capital required will increase also.
Got it, thanks.
4y ago#3You are welcome :-)
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