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A working capital requirement of a firm depends upon its operating cycle. Here, Operating Cycle is the total period considered starting from the purchase of the raw materials till the final payment has been collected from the debtors. Longer the operating cycle, larger will be the working capital requirement.
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The above statement is incorrect. Social welfare depends both on the quantum of output as well as the composition of output. If goods are produced primarily for richer sections of the society (ignoring the interest of poorer sections of the society), social welfare is bound to remain low even when the quantum of output is rising.
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Devanshu Gupta 5 years ago
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