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Business Studies · 2025 · 4 marks
CBSE 2025 · Region 5 · Set 1 · Q26
‘Omara Ltd.’, is a garments company that produces jackets from organic, recycled and sustainable materials. The sourcing of eco-friendly fabrics,…
‘Omara Ltd.’, is a garments company that produces jackets
from organic, recycled and sustainable materials. The sourcing
of eco-friendly fabrics, slower production process and focus on
ethical labour practices result in big time gap between receipt of
fabrics and their conversion into jackets. Since 'Omara Ltd.'
faces intense competition in the garment industry, it has to hold
large stocks of jackets to meet urgent orders from customers. To
further attract and retain customers, 'Omara Ltd.' offers liberal
credit terms to them. Thus 'Omara Ltd.' is able to perform
much better than its competitors.
(i)
State whether the total working capital requirement of
'Omara Ltd.' will be high or low.
(ii)
Justify your answer given in (i) above by identifying and
stating any three factors affecting working capital requirements
discussed in the above case.
Marking-scheme solution
(i)
The total working capital requirement of 'Omara Ltd.' will
be high.
(ii)
Factors affecting working capital requirements:
(a)
Production Cycle: The working capital requirement of
‘Omara Ltd.’ would be high as there is a big time gap
between receipt of fabrics and their conversion into jackets
(b)
Level of Competition: 'Omara Ltd.' faces intense competition
in the garment industry, it has to hold large stocks of jackets
to meet urgent orders from customers, the working capital
requirement would be high.
(c)
Credit Allowed: The working capital requirement of ‘Omara
Ltd. is high as it is offering liberal credit terms to it’s
customers.
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CBSE Class 12 Business Studies past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.