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    CW 10.12.23-1

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    Aashima Bajaj
    The document estimates the working capital requirements for a company based on its annual production units, raw material costs, wages, holding periods, and credit terms. It calculates current assets like raw materials, work-in-progress, finished goods, and debtors based on production units, costs, and holding periods. It also calculates current liabilities like creditors, wages, and overheads based on production units, costs, and payment periods. The net working capital is determined by taking the difference between gross working capital (current assets) and current liabilities. An example calculation is provided for a company with annual production of 1,04,000 units.

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    CW 10.12.23-1

    Uploaded by

    Aashima Bajaj
    4 views2 pages
    The document estimates the working capital requirements for a company based on its annual production units, raw material costs, wages, holding periods, and credit terms. It calculates current assets like raw materials, work-in-progress, finished goods, and debtors based on production units, costs, and holding periods. It also calculates current liabilities like creditors, wages, and overheads based on production units, costs, and payment periods. The net working capital is determined by taking the difference between gross working capital (current assets) and current liabilities. An example calculation is provided for a company with annual production of 1,04,000 units.

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    The document estimates the working capital requirements for a company based on its annual production units, raw material costs, wages, holding periods, and credit terms. It calculates current assets like raw materials, work-in-progress, finished goods, and debtors based on production units, costs, and holding periods. It also calculates current liabilities like creditors, wages, and overheads based on production units, costs, and payment periods. The net working capital is determined by taking the difference between gross working capital (current assets) and current liabilities. An example calculation is provided for a company with annual production of 1,04,000 units.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    4 views2 pages

    CW 10.12.23-1

    Uploaded by

    Aashima Bajaj
    The document estimates the working capital requirements for a company based on its annual production units, raw material costs, wages, holding periods, and credit terms. It calculates current assets like raw materials, work-in-progress, finished goods, and debtors based on production units, costs, and holding periods. It also calculates current liabilities like creditors, wages, and overheads based on production units, costs, and payment periods. The net working capital is determined by taking the difference between gross working capital (current assets) and current liabilities. An example calculation is provided for a company with annual production of 1,04,000 units.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Estimation of working capital requirement

    Assets

    Raw Material = Annual Production (Units) x cost of RM per unit x (RM Holding Period/365)

    WIP = Annual Production (Units) x WIP per unit x (WIP period/365)

    Finished Goods = Annual Production (Units) x Cost of Production per unit x (FG Holding period/365)

    Debtors = Units of credit sales x Cost of sales per sales x (Debtors collection period/365)

    Liabilities

    Creditors = Units of credit purchase x Cost of RM per unit x (Credit Payment periods/365)

    Wages= Annual Production (Units) x Wages per unit (Delay in wages payment/365)

    Overheads= Annual Production (Units) x OH per unit (Delay in OH payment/365)

    Estimation of Working Capital Requirement (Exp 15.12)

    Particulars Amount (Rs.)


    Currents Assets

    Raw Materials = 1,04,000 x 160 x (4/52) 12,80,000


    Work-in-Progress = 1,04,000 x (160 + 30 + 60) x (2/52) 10,00,000
    Finished Goods= 1,04,000 x (160+60+120) x (4/52) 27,20,000
    Debtors= 1,04,000 x ¾ x (160+60+120) x 8/52 40,80,000
    Cash in hand/bank 50,000
    Gross Working Capital 91,30,000
    Current Liabilities

    Creditors= 1,04,000 x 160 x (4/52) 12,80,000


    Wages = 1,04,000 x 60 x (1.5/52) 1,80,000
    Overheads = 1,04,000 x 120x (4/52) 9,60,000
    Current Liabilities 24,20,000
    Net Working Capital= (Gross WC-Current Liabilities) 67,10,000

    Exp 15.13

    Selling Price= 60 per unit]

    Materials 60 x 40%= 24 per units

    Wages =60 x15%= 9 per unit

    Overheads= 60x20%= 12 unit (overheads will be taken as excluding depreciation 12 -6= 6 per unit)

    Particulars Amount (Rs.)


    CA
    RM = 84,000x 24x 2/12 3.36,000
    WIP= 84,000 x (24 +4.5+3)x 1/12 2,20,500
    FG= 84,000x (24+9+6)x3/12 8,19,000
    Debtor= 84,000x70%x (24+9+6)x2/12 3,82,200
    Gross Working capital 17,57,700
    CL
    Creditors= 84,000 x 24x 2/12 3,36,000
    Wages= 84,000x9x1/12 63,000
    Overheads= 84,000x6x0.5/12 21,000
    Current Liabilities 4,20,000
    Net Working Capital 13,37,700

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