For instance, over-estimation of working capital would lead to blockage of scarce funds in idle belongings. If the demand for and value of the merchandise of small- scale enterprises are topic to wide variations or fluctuations, the contingency provisions should be made for assembly the fluctuations. This will clearly increase the necessities for working capital of the small enterprises. While one can add certain different factors to this listing, the said elements look like the most important ones in determining the requirement of working capital of a small-scale enterprise.
The requirement of working capital additionally varies among the many enterprises relying upon the character of the business. For occasion, trading companies require extra working capital than manufacturing companies.