Working capital proportion: For most chemical plants (excluding strongly seasonal products), the ratio of working capital to total capital investment typically lies in which range?

Introduction / Context:Working capital finances inventories, receivables, and operating cash. Its ratio to total capital investment is a standard benchmark in project cost estimation.

Given Data / Assumptions:

• Non-seasonal chemical manufacturing.
• Normal credit and inventory practices.

Concept / Approach:Rules of thumb place working capital commonly around one-tenth to one-fifth of total capital investment for typical chemical plants, reflecting inventory cycles and receivables policies.

Step-by-Step Solution:Identify realistic range: 10–20% for most non-seasonal plants.Eliminate extremes: below 2% is too small; 50–60% is atypically high.

Verification / Alternative check:Design handbooks show typical working capital estimates of 15% ± for steady, continuous operations.

Why Other Options Are Wrong:0.1–2% underestimates; 50–60% grossly overstates normal needs.

Common Pitfalls:Ignoring special cases (seasonal demand, long receivables) which can push the ratio higher.

Final Answer:10% to 20%