(a) Business cycle: Different phases of business cycle alter the working capital requirements of a firm. As, at the time of boom, the market gets flourishes and that leads to be higher sales, higher production, huge stock of raw material and also leadsto more debtors. Accordingly, during this period, the need for working capital increases. As against this, during a period of recession, there is low demand, small amount of production and sale, etc. Thus, the working capital requirement decreases:
(b)Operating efficiency: If the organisation has high efficiency it means that the organisation is utilizing its raw material and other inputs in the optimum manner with minimum wastage. This implies that it can manage its operations even with a low inventory.Also, during operations, a firm with high efficiency incurs lower expenses. An improvement in the efficiency of an organisation leads to a higher inventory turnover ratio and a higher debtor's turnover ratio. In such cases, the organisation requires a lower working capital. On the contrary, firms that are less efficient require large working capitals.
(c) Availability of raw materials: If the raw materials are easily available to the company then the company need not to maintain huge amount of inventory. In this case, the company requires less working capital. On the other hand, if the raw materials are not easily available or their supply is not smooth, then the company has to maintain a huge stock of raw material to ensure constant operations, it require a large working capital.
(d) Level of competition: As the competition in the market increases' the company must maintain the large amount of stock of finished goods to provide the consistency in the market that leads to high amount of working capital requirement.