ASSETS

OF CURRENT
272 PART V: MANAGEMENT

II. Current Liabilities : 30,000

(5,000 X3X2)
Creditors
(5,000 X?0.50 X1) 2,500
Wages 5,000
(5,000 XR1X1)
Overheads 37,500
Total Current Liabilities 37,500
Net Working Capital
(CA-CL) 1,66,250
The following is the additional information:
llustration 13.3 240
Selling price per unit
Prepare an estimate of networking capital requirement of Level of activity 1.04,000 units per annum
average 4 weeks
Zero company from the data given below: Raw Materials in stock
stage
Estimated Cost per Unit Amount per Work in progress [Assume 100% per
and 50
of Production Unit () of completion of materials
average 2 weeks
Raw Materials 100 cent for labour and overheads]
Finished Goods in Stock average 4 weeks
Direct Labour 40 average 4 weeks
Credit allowed by Suppliers
Overheads 80 Credit allowed to Debtors average 8weeks
220
Lag in payment of Wages average11/2 weeks.
Cash at Bank is expected to be 25,000. Assume that produc.
tion is sustained during 52 weeks of the year.
Solution:
STATEMENT OF WORKING CAPITAL REQUIREMENT
A. Current Assets Amount ) Amount (?)
Raw Materials (2000 X 4X 100) 8,00,000
Work in Progress
Raw Material (2000 X2X 100) 4,00,000
(2000 X2 X 40) 50% 80,000
Wages 6,40,000
Overheads (2000 X 2 X 80) 50% 1,60,000
Finished Stock (2000 X 4 X 220) 17,60,000
Debtors (2000 X8X 220) 35,20,000
Cash 25,000
Total Current Assets (CA) 67,45,000
B. Current Liabilities
Creditors (2000 X 4X 100) 8,00,000
Outstanding Wages (2000 X 40 X 1.5) 1,20,000
Total Current Liabilities (CL) 9,20,000
Net Working Capital (CA-CL) 58,25,000

Working Notes: Average raw material in stock is for one month. Average
(0 Annual production is 1,04,000 units and year is consisting material in work-in-progress is for half month. Credit alowe
of 52 weeks. So, the weekly production is 2000 units. by suppliers: one month; credit allowed to debtors :days o
(i) Debtors have been taken at cost of production. month. Average time lag in payment of wages: 10ofthe
average time laggin payment of overheads 30 days. 25%
sales are on cash basis. Cash balance expectedmonth. to be
Illustration 13.4
R1,00,000. Finished goods lie in the warehouse for onem
The cost sheet of POR Ltd. provides the following data : working
You are required to prepare a statement of the units
Cost per unit of 54,000 the
capital needed tofinance alevel of the activitythroughout
Raw material 50 of output. Production is carried on evenly your
Direct Labour 20 year and wages and overheads accrue similarly. State
Overheads (including depreciation of 10) 40 assumptions, if any, clearly.
Total cost 110 Solution :
Profits 20 means
As the annual level of activity is it
Selling price 130 at 54,000 units, units
given 54,000/12
that the monthlyturnover would be = 4,500
 Working
Notes
1. : I.
Estimation the
Thefollowing 3. the In
2. Liabilities:
CurrentIL. Can
- liustration
of 13.5
Liabilities
Current
Net Total Working
Capital
Gross Minimum
Inventories Balance
Cash
Current
: working
- Finished cost.ofThematerials Ihe Raw a consist working
dividing Since,
assumption
complete. 50%are wages have finished has cost The Creditors Creditors
Creditors Debtors
Finished Work-in-progress :Raw now
Ihe 20%Credit Time Iime Materials Raw unit,per10 Working Capital OverheadsWages Materials
Selling
price Profit Total
Overheads Labour
Direct Company: been
pany of lag lag materials
degree Overheads
has (4,500
Materials Assets of be
allowed of the and been
valuation Goods 50% estimated capital
the goods for for for (4,500 Working
in
in goods 30 capital
the wages overheadstaken taken been X 50% of :
output receipt payment of information that Overheads
Materials
Wages (4,500
Product monthly
days). ignored which isa 100(4,500 (4,500 of X
xpects completion
stock
are are and requirement
by of ×(4,500 50)/2 X
provided are on at ofonly (4,500 X* X as
suppliers is in in
an full debtors. (4,500 759%) 50) Capital
of process work-in-progress, at 40 (4,500 20)/2 follows
sold of on stock cost average have for X 100) X
has wages paid requirements non-cashitem.
This per *30)/2
to proceedswages an 30 20)/3 X
against
keep sheet been with valuation X CH.
is on by been per The unit 50) Requirement
is average 30) :for
13:
a one and
50% on an by
wages all
an extracted a unitstaken overhead
unit. include this
Cash cash. from average
in 3 1,00.000 ? WORKING
average (assuming time 12,81,250 Amount
month.overheads isrespect of 3,90,000
1,35,0002,25,000 4,50,000 1,12,500 2,25,000
3,37,500 turnover
monthly
in for 30,000 33,750 22,500
lance debtors for has lag th
work-in-progress,
only e
work-in-progress a
one for from been of 15 cost, depreciation
of for at raw depreciation
days;
a 10 50% 12,81,250 ? CAPITAL:
of is
ismonth. all one two the therefore, Amount
2 1½elements months. month taken days, materials 8,91,250
3,90,000
,000. months.weeks. month. records onbut
120 105 40 20 45 the the the of
15 to by ESTIMATION
Solution : ing You year. nextthe The
Material
Raw Production
process FinishedRaw Sales Working
2. Notes
1. : NetCreditors 1.60 Current
54)Liabilities balaánces Current
Assets :
on
You month customers
and tion. Overheads
one
for 20% Wages
Direct Selling Credit llustration
XYZ 13.6 Creditors :CashFinished Stock
Work-in-progre[s
Debtors
Current
Assets: I. Solution : Material Statement Capital arCompany
cash Production
payment
consisting Finished Working e
0X35X1) Work-in-Progress
(5,750X5X1)
Debtors 809% (5,750X25X2)
(5,750X25X1)
(5750X5X1l)
Finished 50%
OH
Wages50% Material Raw Material and Ltd. of
urrent
ASsets
Total areOverheadsThere Sales allowed Raw required
of Price for of (12,000Gogds AND
Statement required cost Production
Goods supplied
Raw requirements
is
accrual capital Wages Materials
introduced is are per goods (12,000X CALCULATION is
Goods basis. in Materials showing
regular by Store in of ofper (12,000
2 poised
on unit wages 4 (C.A & X* to
accrue Creditors Store Overheads
to the weeks. month and 105 X(12,000 prepare
(5,750X3 of
and month. cash
for -C.L) 1 XCompanytheof
(12,000 1 the for
Working
find Production
Overheads following and Debtors 80%) XX*X?
of
in the 105) X a
basis has 105) 2 Working manufacture
out the evenly.Overheads year (12,000 the a
overheads, been X1X45) X*45) statement
5X1) beginning its X Company
Capital working and information: have X 50%
Wages
are and taken
consumption 2
months months 3
69,000
units Capital
credit 20% 10% 50% months
50.00 month 1 2 been
[B. paid include5 showing
Sale 10,80,000 Z of
Requirement Com.(H.), capital of are of of of month at
20,16,000
12,60,000
taken 2,70,000 5,40,000 50,86,000
1,00,000 6,30,000 requirement 1,44,000
Production 15 cycle salesSelling Selling
Selling 12,000
days paid
requirement as is at the
in and allowed Price taken units. 42,76,000 units
12,24,750 D.U., in Price Price cost. 8,10,000
1,61,000
6,03,750 1,43,750 2,87,500 arrears. thedeprecia Wor k 273
14,37514,375
2014] cycle. nextWages For in
to
as
 Solution: (d) Additional
(c) information hecompany's Vlustration13.9 heen
2.. 1 showing From () (e) (b (a) Selling
:price Profit Material
Direct
OverheadsLabour Rawdetailed is meofnts The
Suppliers month.
production.
Finished
a spect months.
total ors Work-in-progress Raw
Minimum 1,80,000 estimAssumpt
atednoions
liabilities
current current
Liabilitiesassets
Current: Total Current
Finished balance
Work-in-progress
Debtors Raw Cash Total
Assets : (1,80,000X?
depreciation)
(excluding
Overheads
cost 10) Direct Raw
half-a-monthThere sales.
the showing conmputed
management
(excluding
dep.) Creditors
Overheads
Net Total Direct are
Statement workingabove of materials below units O
working Materials Material is
provided (including
labour Labour a all product the cash :
(R
(75%Goods ofgoods desired on Net
(R facts,time-lag materials elements) : of
36,00,000) X* Statement
(1,80,000 capital in are working of
output cash cost
capital 18,00,000) ( (Total (1/6 of (1,80,000 two remain depreciation Royal working
9,00,000) 63,00,000) (Total Working you the (assume held cash for basis.
in cOst.
of case month's will for
rement cost
requirements. payment are extend the capital
Industries
X
cost
36,00,000) in balance
in t capital
Hence,
X 1/12 X X of
required of approximate
warehouse, above he
1/24 >X + stock,
1/12 X Capital 5)20) Total overheads. 50% of year. to
12) + credit; a investment 3
1/6 24 ofmonth's completion on is 5 mentionedfinance requirement
WORKING :
X Cost wages per The has
to 20,000.
an
50%) Requirement
prepare cash unit)
on toaverage, cost called
an level a
of salescredithalf-a-month's Cost structure
unitperactivity
a average, for debtorhasinnCAPITAL
a
month; stage of beenhas
statenment are and
for activity a
6,13,750
4,50,000 5,25,000
7,87,500
3,00,00020,63,750 6,00,000
1,31,250 Amt.(?) 63,00,000 36,00,000
18,00,0009,00,000
75,000 75,000 20,000 10
50
25% debt in two 40 15 5 20 level tor state-
and of for re ESTIMATION
:

Hi-tech expenses.
complete
excludedNote:
overheads.
Material
Raw Illustration
cost 13.10
expenses.
Solution :
progress Assuming
gross
is Finished
Work-in-progress
Debtors
stage
expected Manufacturing
Material
stagestagestage
Raw expenses
Selling,
The Selling
price
Calculate have been Current
Work-in-progress:StockAssets : 5%
Selling Total Material
cost Labour
Overheads
priceProfit Direct Raw SRCC
Illustration
the 13.11 be Requirement
Note:Working
Capital Cash Debtors Finished
Goods: of
valued Manufacturing
Expenses Raw (2,50030) x Raw
duration Depreciation
(2,500 Manufacturing working of goods Ltd.
included
beenSelling, Balance of the administration in from AND
Ltd. Materials Statement to
(2,500 Material Raw is the respect
Work-in-progress
plans
X be CALCULATION
from valued
at ½X 25%gross sold total
(13,06,2 Material monthly
capital as at
in X
amount of administration
30. 150) 30) (2,500 working
complete follows:
various is to of cost is
thevaluation Expense(2,500 of assell materials a
at and non-cash
as
full 50 (2,500 requirement follows
30,000
following X X X Working sales well
5/95) 1/2 100) stages financial
cost. 25% X capital
working of X [B.Com. with level ashas as
closing 100) of 2 units:
and X wellasworkingitem,
information: Alternatively, 100) Capital of been
respect
requirement, if of expenses
financial next
stock. (H), th2,500
e the labour therefore,
capital assumed
capital
Requirement desired operating year.
1,25,000 2,50,000 Amt.()
However, 37,500 18,750 D.U., to units,
requiremnent Debtorsexpenses The and
manufacturing provided it
cash
2013 andestimate Z(Per
Unit) overheads to has
Unit)
(Per Z month1/2 months 2 expected
400 340 120 13,06,250 2,68,750 month 1month 1 cycle 200 100 be
60 60160 Debtors 1,62,500
can have13,75,00068,750 3,75,000 5,00,000
Amt.(?) balance
Adapted] work-in 20 30 275
50% been
by
for also not the is
 nversion u Is cle.crual. astration Current
13.12 Liabilities
Net TotalCreditors Liabllities Total
Debtors
CurrentCurrent
:Assets Labour
50% and Raw
FinishedWork-in-progress Balance
Stock CashCurrent
Assets : tion : nth. he of s.
Ltd. C
ere Wages
erheadsOverheads Material
Direct Production
RawSellingCredit process
CreditinventoryProduction
Materials
Raw
inventory
Finished
Goods data t120Creditors
4)
XCreditors may weeks.52
Cted in n. allowed tors
are
Work-in-process in Working year hand One Time
e is Materials ofStatement
required thMaterial
a of (2,000Goods Raw
assume level is
costs accrue
regular Price given
allowed ABC for fo(2,000
r and fourth tw o
beginning Overheads Material ofand lag by
Capital OverheadsWages X
(2,000 (2.000
of Ltd. X 75%X athat months, in
equivalent is
evenly. per to the of
160
tointroduced
(2,000
by
time production theat ofsuppliers
find production Debtors (CA X X pavment
unit year is X 340 340 (2,000 160 (2.000 Working production the
of
involves Creditors: as - (2,000X 4) period bank
out
manufacturing Wages CL) X X X X sales Time
under: 8) 4) X 2) X is
working to 60 180 l60
in X amounts is of lag one
50%. 14) X X Capital of is expected are
use the are on :50% each250 : : : : 2) 4) four overhead monthin
of paidsales 20% 10% months 2
consumption
months 2 69,000
units X
carried made
(B.Com. capital beginning
full
3 month l months 3 weeks to payment
in of of months t6,40,000 Requirement
process of 3,60,000 Amount on
l,04,000 to on and
unit tcycle,
he sellingsellingselling be
expenses
requirement
(H.), is
evenly cash credit
of next
of of
D.U, production wages equivalent 50, 000 wages
and raw month price price price 24,20,000
67,10,000 12,80,000 91.30,000 27.20,000
40,80,000 10,00,000 12,80,000 Amount
units basis.
9,60,000 1,80,000 50,000
through allowed
is
2010] other mate tor : is
and and one 12
of of to a

B. Solution :Selling monthsmaterial,

credit wages
the process
raw before The current mation: 13.13
same Ylustration
Current
Assets: A. assumptions
Total provision Production Liabilities:
CurrentII
Cash
Prepare Assets:L.
rement
Working
CapitalcontingencyExcess
Overheads
10% + Wages Currentcurrent
assets
Total Raw Finished warehouse RM
FG WIP Current
Debtors Creditors
WorkingWages
CreditorsWork-in-progress Overheads
materials
raw Wages Raw Debtors
Lag Lag Thegiven Direct level
(80,00,000
of Liabilities Materials Statement Sales price from production.
or
fmaterials year. a
(5,750 (5,750
CA (80,00,000 (80,00,000
Goods of estimatedin in of
(80,00,000 = 2 during X
Capital(5,750(5,750 (5,750
over
10,00,000 may 10%payment payment
is to months activity
The working 3 RMX2
(80,00,000 (80,00,000 debtors the for X O/H(5,750
CL >X (80,00,000X
: X XX
W(5,750 X
20% X 80% of befor expected the Requirement 3X40) (5,750 25)
X
date 3 ordinarily
Every 1X x2
40%X4/12) per 8 balance months. and
20% X made. of of and is capital 5) X
1/24) X Working contingency
XX is previous 40)
X 40%X 80%3/12) X expenses
unit. wages overheads. intended 25) XX1 X
1/24) 80% 8=80,00,000
3 ofassumed isunit
X
months th e X5) 1X
3/12) 3/12) X of Credit ratios forecast 1X
2/12) You delivery remain
of 209% 20% 40% (CA 10) 50% 25)
Capital cash
½ year
month
½ production of to - 50%
(except monthare from Finished
to allowed fromthe CL)
to in cost bewasfollowing 2,87,500 2
maintained 2,87,5001854375
6,90,000
6,90,000 1,43,750
10.66,667 50.66,66710.66,667 16,00,000
Requirement required bethe of bestores 28,750 28,75014,375
66,666 66,667 8,00,00016.00,000 to
10,00,000
held consisting
cash). date raw goodsby selling
? creditors remainsmonthsfor 3
to 2,00.,000 materialof 1538,125
38,66 6 7
1200 00 5066 6 7 Relevan dispatch remain priceduring units 3.16250
3,86,667
4 ,53,3 420 0420.53 34 make of
e infor-
a
and is in100% thin
4 ares the The
 IITotal Finished
Debtors Progress: Cash
Assets: Solution:
Work inRaw Current carried
I. overheads
accrueworking For (vi) (v)
similarlv. (v) (iv) (i) (i) à
mations
cost-price
Existing so,000
0 tions,
COmpany units
lilustration
perGrow 13.15 Net Material
Raw ProfitTotal
Cost Material
Ra
Cost
w workinlg:ustratio13.n 14
Current
Creditors Labour Raw STATEMENT an Overhead
Expenses
Required
25% Wages Credit Finished
Credit Goods
Work-in-Progress
Average Complete)
(50%Average
Selling
Price Overheads Labour
Variable)
(ADirect
l Cost Cost/ providesLtd.
Working Total 0/S O/S Current Overhead Material
Material
ages Raw expected
it More Overheads
Current (1,00,000Goods Material on
capital of Profit
are has Wages [(1,00,000 allowedallowed
would (1,00,000 Liabilities evenly the time Amount
available been Ltd. Capital (1,00,000 Assets [(1,00,000 (1,00,000
(1,00,000 (1,00,000 output Cash per
Liabilities >X annual
OFrequirement the
operate annum. is lag to by
unit:
decidedpresentlyRequirement(1,00,000 (CA) 75% >X WORKING throughout in
X : 36) X in
Suppliers
ishand Customers
of following
: X84) X X36) X 84) the Back
structure 36) 156) 156) + X sale sold
at In (CL) X + 24)] 84) ÷
thatview
90% operating 36) 12 of for and
payment CH.
24
÷ ÷24)] ÷ 12
assuming up
+ 6 12
50% 24 CAPITAL
capacityfrom of (CA 50% 1,00,000 cash. at the Stock: 13:WORKING
particulars
per favourable 12] Bank
- X year of:
unit at CL)
lst 1.5 ?
The 60% 3,50,000 REQUIREMENT thatunits, 3,00,000.
2014,the
is January 75,000
75,000 and
givenfollowing level, relating
market productionwork
wages months12 CAPITAL:
month 5month 2 month ½
below: producing 34,50,000 47,50,000
13,00,000 out monthmonth
1 1month 1
13,00,000
4,50,000 7,00,000
1,50,000 19,50,000 5,00,000 3,00,000
7,00,000 to
74.00 200 44156 36 36 84 its
infor condi and the
2.00 is ESTIMATION
Solution : (b) (a) You (v) (v) (iv) (in) (i)
Current
AssetsA. profit
(A-B)Net Total VariableWages Raw Cost :Sales Units
Liabilities
CurrentB. cost(B) Fixed 2000. Overheads Profits
Overheads
It(Variable)
(Fixed), m
Calculate are
basis Prepare throughout creditorsCredit
beLag allowed to tion are Rawexpenses
Finished
Liabilities
Current
Total
Outstanding Sundry Current
Assets
Total Overheads
month)
Finished
Debtors Materials
(1/2
month)
Wages
(1/2
Work-in-progress : Stock
4) Assumptions is
Working Outstanding Material (54,000 (at
Overheads (54,000 2) X Statement
assumed in issued
processmaterials expected AND
Statement
of 90% to required
Raw Overheads wages
Creditors 2
Goods sustain profit is goods and
Capital (1 capacity) to CALCULATION
months month (54,000 X the 3
OverheadWages Materials the fo
production.r
(2 (R1X 10) made working to that months.
and remain sales that
Requirement (3 month) of of statement
the :
production remain
X (54,000 (A) 1
months)
(1 (4,68,000/12)] X 4,500 Working
X Profitability overhead
wages debtors month. the
month)
(1 (2 36,000) if
increased per
months 4) in cost
month) X4) any,
X?2) requirements in stores unit
(CA at and godownis These of
X
Capital should 90% cycle.
payments 2 will
-CL) 4,500X for ra w
at production overhead months.
90% capacity units remain
be for months 2material,
Requirement clearly
Capacity on is Credit 2remain
18,000 accrue months. unchanged
6,0004,500 level. an level; month. l before
these wages
75,40,000 indicated.estimated allowed by in
2,16,000
1,08,000
1,08,000
and produc
2,20,500 4,68,000
72,000 36,000 54,000 evenly It rate, 1.00 1.00 2.00 277
1,45,500 78,000
78,00028,500 36,000
54,000
75,00012,0009,000 may in
 P13,2
P13.1 3. 2. 1. :
follows The Progress, 278
Note :
month.Working
accrue
unitssimilarly. requirements Explain
What How Discuss need Overheads
Wagesand
(itn) (i) showing () From [Answer evenly
R75,000. holdallowed Lag Credit Materials
Finished
goods RawSelling Total
Overheads
price Profit Materials
cost Labour
Direct
Elements of
Rawavailable:
costmation valuation
activity
areworking You Overheads = Wages
Projected
nalysisSelling in are the for So,
the (ie, payment
cash allowed materials are are
estimated during It by he
tvalue the
working the
following Working 1,000 : are of
required onthe
price
may suppliers
in 52,000capital method factors of
of relevant based an
wvages
Annual unit the hand
be of are inare of finished average,
halffor
selling to
process, ?1,08,000
36,000 +
working
perinformation, noted
year wages
customers in in units
needed towork-in-progress oncapital. 1,08,000
per
Capital factors? considered and :
and ofstock, stock, prepare of 24 The
price: unit sales week) sales. goods
and that isr aw of estimation 24 overheads
1½ on to
6). capital at on on output. (B -=74500
work
26,000 requirement production materials
weeks. an finance a Com. can
is wages bank is an an
prepare ? foraverage,
average, statement while month in
average The (H. ) also
requirement:
units. 3,20,000.] can of , included
progress PART
and
amounting It 8 a
isweeks. is following level determining
working D. =6,000
be or
a necessary
is for for for be U, V:
statement overheads
for carried for showing arrived 1/24
of estimated 2009, period
4 6 2 4 unit
per ? in
MANAGEMENT
52,000 weeks.Credit weeks.weeks. weeks. annual of
work-in
infor capital a
onto to 20 4 16 th e 2012] at year. is
6 2 8 the as one
?
P13.3 "Depreciation 5. OF
Differentiate 4. stock. goods balance Variable
TotalFixed Number
cost unitsof
working total
requirement
production have 90% the As
Labour
Materials quirement
Raw monthly
anticipated is cost cost CURRENT
CreditCredit lincludeoverheads
Materials96,000 perBudgeted
Overheads facturing
[Answer:Working capital From (v) (iv) cost decision
already already
purchased
week. raw of of (
allowed
llowed the Finished
Cash LaginCredit Credit
Production Raw Time Material 10%. capital basis 36,000/12)
finished
and sales been
wil Planned following to ASSETS
16,000expenses
company, re
ratiosforecast inpayment by to materials lag
ignored
shouldbe and the materials,taken,
tostay
byprocess hand need during
brought increase goods
of goods suppliersdebtors (on 409%6; working X
ditors cash it 2
Debtors in stock 32,000
of process (9,000
units information
for Capital is average) Labour for
include cost in and the worink has the e
prepare
working a expected are wages of 5 stock a cost desired
level.
the
to been
is ofwil units the
to in weeks.
3 4
firm."
Why? capital not operating 8)X
is 5finished selling coming requirement stock weeks. weeks. 30%; basis. periodprogress +
weeks. for depre 3 for assumed
@ and 6,000
month. 1 presented to weeks. Overheads determining while
requirement increasing
2 be 2 AssiGNMENTS wil
weeks.goods. raw
reciation T prices overheads
weeks, capacity =?78,000=8perunit
l6,000 10year PROBLEMS and
that Z6,000 4,500
32,000. .Consequentlybe
finished
materials ofper are per : by is the only the
from X
unlt Expe a2,69, 20%; 2
weeks 2 based opening
\eve for goods =9(M
4for 0 7 week 30% 40% : 2 manu 00) Proft 60%,
& d he
 CH. 13 : WORKING
CAPITAL: ESTIMATION AND
Lagin payment of Overheads is 2 weeks. CALCULATION 279

25%ofsales may be assumed against cash and cash in (i) the working capital limits likely to be
expected to be 225,000. by bankers. approved
handis
Estimated for next year :
Assumethat productioniis carried on evenly
wages and overheadlaccrue through-
Annual sales Z14,40,000
outtheyearrand similarly. Cost of production 12,00,000
Assumealso 4 weeks a month.
Raw Materials purchases 7,05,000
(Answer:Working Capital requirement for a weekly Monthly expenditure 25,000
sales of 8,000 unitsiis 4,60,000. The overhead cost per Anticipated Opening Stock of raw
nit is 1.50(Le.(16,000-4,000)-+-8,000) and cost of materials : 1,40,000
goods soldlis 85% of selling price.] Anticipated Closing Stock of raw
materials : 1,25,000
IS4 M/s POR and Co. have approached their bankers for
their working capital requirement,who has agreed to Inventory norms :
Raw Material 2 months
sanction the same by retaining the margins as under: 15 days
Raw Materials 20%
Work-in-progress
Finished Goods 1month
Stock-in-process 309%
Finished goods 25% The firm enjoys a credit of 15 days on its purchases and
allows one month credit on its supplier. On sales
orders the company has received an advance of
Debtors 10%
From the following projections for next year you are ?15,000. State your assumptions, if any.
required to work out : [Answer: Working capital ? 3,50,625, Loan to be
approved at 3,32,750.]
() the working capital required by the company;
and