How is the working capital affected by (i) Sales; (ii) Technology and Production policy and (iii) Inflation?

(i)Sales: Sales and Demand Conditions of a firm also affect its working capital. It is difficult to precisely determine the relationship between volume of sales and working capital needs. Sales depend on the demand conditions. Most of the firms experience seasonal and cyclical fluctuations in the demand of their products and services.// 

(ii)Technology and Production policy: Technology and production process is another factor that has a bearing. If capital intensive, high technology automated system is adopted for production, more investment in fixed assets and less investment is current assets are involved. 

(iii)Inflation: Inflation has a bearing on level of working capital. Under inflationary conditions generally working capital increases, since with rising prices demand reduces resulting in stock pile-up and consequent increase in working capital.