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Networking Capital Problems FM

The document outlines the process for determining working capital, including the estimation of current assets and liabilities. It provides specific financial details for Swasthik Ltd, including costs, production, and sales data to estimate the working capital requirement. Additionally, it includes information on inventory turnover and credit terms affecting cash flow.

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shreyasofficial7890
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7 views5 pages

Networking Capital Problems FM

The document outlines the process for determining working capital, including the estimation of current assets and liabilities. It provides specific financial details for Swasthik Ltd, including costs, production, and sales data to estimate the working capital requirement. Additionally, it includes information on inventory turnover and credit terms affecting cash flow.

Uploaded by

shreyasofficial7890
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Working Capital Management

Amount

Determination of working capital


(i) Estimation of current asset:

(a) Minimum desired cash and bank balances

(b) Inventories

Raw material

Work-in-progress

Finished goods

(c) Debtors

Total current assets

(ii) Estimation of current liabilities:

(a) Creditors

(b) Wages

(c) Overheads

Total current liabilities

(iii) Net working capital (i) – (ii)


Add margin for contingency
Net working capital required
Question 1
• The following particulars are available form the books of
Swasthik Ltd:
• Particulars Per unit (Rs)
• Raw materials 45
• Direct labour 9
• Overheads 21
• Total cost 75
• Profit 15
• Selling price 90
• Additional information
– Raw materials are in store on an average for 2 months
– Materials are in process for one month
– Finished goods are in store on an average for 3 months
– Credit allowed by suppliers is 3 months
– Credit allowed to customers is 2 months
– 20% of the output is sold for cash
– Production and sales 70,000 units
– Cash in hand is expected to be Rs. 35,000
– Estimate the working capital requirement.
Problem 2

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