Question

State any three factors that affect the fixed capital requirements of a company.

Answer 1

Factors Affecting Fixed Capital Requirements:
1. Nature of Business: The type of business (e.g., manufacturing vs. service) significantly affects the need for fixed capital, as manufacturing businesses generally require more capital for machinery, equipment, etc.
2. Scale of Operations: Larger businesses or those with plans for expansion will need more fixed capital to support larger-scale operations.
3. Technological Changes: If a company operates in an industry where technology is rapidly changing, it may need higher fixed capital to invest in new machinery and equipment.