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  • Month Total Funds Permanent Seasonal Required Requirement S Requirement S

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    rohan
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    This document compares three strategies for managing a company's working capital requirements over a 12 month period. Strategy A maintains a constant permanent funding level each month while Strategy B and C increase their permanent funding levels. The document lists the total funding required, permanent requirements, and seasonal requirements for each month under each strategy. It then calculates the average seasonal needs, cost of short term and long term funds, and total cost of working capital for each strategy. Strategy B is selected as it has the lowest long term cost of funds of 120.

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    Q3

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    This document compares three strategies for managing a company's working capital requirements over a 12 month period. Strategy A maintains a constant permanent funding level each month while Strategy B and C increase their permanent funding levels. The document lists the total funding required, permanent requirements, and seasonal requirements for each month under each strategy. It then calculates the average seasonal needs, cost of short term and long term funds, and total cost of working capital for each strategy. Strategy B is selected as it has the lowest long term cost of funds of 120.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    40 views2 pages

    Month Total Funds Permanent Seasonal Required Requirement S Requirement S

    Uploaded by

    rohan
    This document compares three strategies for managing a company's working capital requirements over a 12 month period. Strategy A maintains a constant permanent funding level each month while Strategy B and C increase their permanent funding levels. The document lists the total funding required, permanent requirements, and seasonal requirements for each month under each strategy. It then calculates the average seasonal needs, cost of short term and long term funds, and total cost of working capital for each strategy. Strategy B is selected as it has the lowest long term cost of funds of 120.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    STRATEGY-A

     
       Month Total funds Permanent Seasonal
    requirement requirement
    required s s
    January 17,000 13,800 3,200
    February 16,000 13,800 2,200
    March 15,000 13,800 1,200
    April 14,000 13,800 200
    May 13,800 13,800 0
    June 14,300 13,800 500
    July 16,000 13,800 2,200
    August 16,700 13,800 2,900
    Septembe
    r 18,000 13,800 4,200
    October 17,000 13,800 3,200
    November 16,000 13,800 2,200
    December 15,000 13,800 1,200
    TOTAL 23,200

    average amount for


    STL 1933.33
    ST cost of funds 6.44
    LT cost of funds 92
    Total cost of WC 98.44

    STRATEGY-B

        Month Total funds Permanent Seasonal


    requirement
    required requirements s
    January 17,000 13,800 3,200
    February 16,000 13,800 2,200
    March 15,000 13,800 1,200
    April 14,000 13,800 200
    May 13,800 13,800 0
    June 14,300 13,800 500
    July 16,000 13,800 2,200
    August 16,700 13,800 2,900
    Septembe
    r 18,000 13,800 4,200
    October 17,000 13,800 3,200
    November 16,000 13,800 2,200
    December 15,000 13,800 1,200
    TOTAL 23,200

    LT cost of
    funds 120

    STRATEGY-C

        Month Total funds Permanent Seasonal


    requirement requirement
    required s s
    January 17,000 15,900 1,100
    February 16,000 15,900 100
    March 15,000 15,900 0
    April 14,000 15,900 0
    May 13,800 15,900 0
    June 14,300 15,900 0
    July 16,000 15,900 100
    August 16,700 15,900 800
    Septembe
    r 18,000 15,900 2,100
    October 17,000 15,900 1,100
    November 16,000 15,900 100
    December 15,000 15,900 0
    TOTAL 5,400

    Monthly
    requirement 450
    ST cost of funds 1.5
    LT cost of funds 106
    Total cost of funds 107.5

    STRATEGY B HAS BE SELECTED (LONG TERM FINANCE -120)

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