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Along with the fixed capital nearly every Small-Scale industries requires working capital though the extent of working capital requirement differs in different businesses. Working capital is needed for running the day-to-day business activities. The necessitate for working capital can also be explained with the help of operating cycle. Operating cycle of a manufacturing anxiety involves five phases:
Conversion of raw material into work-in-progress
Conversion of work-in-progress into finished goods
Conversion of cash into raw material
Conversion of finished goods into debtors by credit sales
Conversion of debtors into cash by realising cash from them.
calculation math
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