Final answer:
The capital requirement refers to the amount of funding a firm needs to operate and carry out its business activities.
Step-by-step explanation:
The correct answer is C) Refers to the amount of funding a firm needs to operate.
Capital requirement refers to the amount of funding that a firm needs to operate and carry out its business activities. It represents the financial resources required to invest in assets such as machinery, equipment, buildings, and inventory, as well as to cover operational expenses such as salaries, utilities, and marketing.
For instance, if a firm wants to expand its operations, it may need to invest in new equipment and hire additional employees. To finance these investments, the firm will require a certain amount of capital. The capital requirement can be met through various sources, including early-stage investors, reinvested profits, borrowing from banks or bonds, or selling stock.