8/17/2019 Working Capital Questions

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Working Capital Management

Q.1) A pro forma cost sheet of a company provides the following data

Costs(perunit) Rs

RawMaterial 5

!irect la"or 1#.5

$verheads %# &otalCost'unit 11.5

ro*t 1#.5+ellingrice 1%

  &he following is the additional information availa"le

Average Raw Material in stoc,- 1 Month Average material in rogress - / Month

Credit Allowed "y +uppliers - 1 Month Credit Allowed to de"tors - Months &ime

0ag in ayment of wages - 1.5 ee,2s &ime lag in ayment of $3 - 1 Month $ne

fourth +ales on Cash 4asis. Cash "alance epected Rs 1

 6ou are re7uired to prepare a statement showing the wor,ing capital needed to

*nance a level of activity of 8 units of output

Q.) A *rm has applied for wor,ing capital *nance from a commercial "an,. 6ou are

re7uested "y "an, to prepare estimate of wor,ing capital re7uirements of the *rm.

 6ou may add 19 to your estimate *gure to account for eigencies

  Rs

+ales:8

C$;+1

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Material ?sed>#>>

ages @ other Mgf

=penses

1#

0ess- +toc, of inished;oods(19 products notsold)

1>1#

C$;+1

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 RsMillion

Credit +ales 8%1>

Raw Material Consumed #%%

Cost of roduction 5%