Question Set for Working Capital Management

1. The following information is available with respect to the V.K. Ltd:Sales Cost of goods sold Total purchase Other balances:Years Inventory Debtors Creditors 1- 4-2010 Rs. 34 lakh Rs. 45 lakh Rs. 26 lakh 31-3-2011 Rs. 46 lakh Rs. 62 lakh Rs. 36 lakh Rs. 500 lakh 40% Rs. 450 lakh

Assuming that all sales are credit sales and there are 365 days in a year calculate the net operating cycle from the above data. 2. Company ABC has the financial data of the opening and closing balance of the different current assets and current liabilities as shown in table below:Particulars Opening balance of a. Raw material b. Work in process c. Finished goods d. Accounts receivable e. Accounts payable Closing balance of a. Raw material b. Work in process c. Finished goods d. Accounts receivable e. Accounts payable During the year Raw material purchases Manufacturing expense Depreciation Customs & excise duty Selling and other expenses Sales Calculate the operating cycle period and cash cycle period. 3. From the following information furnished by Radha Textiles Ltd., calculate Average accounts receivable Duration of operating cycle Creditors payment period Credit sales for the year Raw material consumed Cost of production Cost of sales Average stock of raw materials Average stock of work in progress Average stock of finished goods 140 days 60 days Rs. 280 lakh Rs. 160 lakh Rs. 250 lakh Rs. 180 lakh Rs. 40 lakh Rs. 15 lakh Rs. 40 lakh Amt (in Rs.) 2,80,000 1,20,000 1,40,000 2,40,000 1,80,000

2,60,000 1,30,000 1,20,000 2,25,000 1,95,000

4,20,000 3,30,000 90,000 1,40,000 6,00,000 18,00,000

Opening balance of accounts receivable

Rs. 25 lakh

4. Homemaker, a reputed washing machine manufacturer, plans to manufacture 12,000 sets of washing machines for the next year. The cost components are as follows:Particulars Raw Material Manufacturing Expenses Selling, administrative and financial expenses Unit Cost (Rs.) 5,000 2,000 1,000

The selling price per unit is Rs. 10,000 and sales may be assumed to be uniform throughout the year while the manufacturing expenses are expected to be incurred evenly throughout the month. The durations at various stages of the operating cycle are given belowRaw material stage Work in process stage Finished goods storage Debtors stage 2 months 1 month 1 month 3 months

You are required to estimate the working capital requirement given that co. maintains minimum cash balance of Rs. 10, 00,000.