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BRILLIANT’S Working Capital Management 143

material, labour and overheads. If nothing àíZ ‘| Hw$N> ^r Zht {X¶m J¶m h¡ Vmo h‘| gm‘J«r, l‘
is given in question, we should take 100% VWm AmodahoS> H$s 100% bmJV boZm Mm{hE& qH$Vw
cost of material, labour and overheads. But
if it is mentioned that wages and overheads `{X `h ~Vm`m J`m h¡ {H$ doOog VWm AmodahoS²>g nyao
to be accrued evenly throughout the year, df© g_mZ ê$n go bJZm h¡ Vmo h_| am° _Q>o[a`b H$s
we may assume 100% consumption of raw 100% InV VWm l_ AmodahoS²>g H$s pñW{V _|
material and 50% (half an average) in case
50% (Am¡gV H$m AmYm) _mZZm hmo gH$Vm h¡&
of labour and overheads.
SOLVED PRACTICAL QUESTIONS

Illustration 2.3.1
X & Y Co. is desirous to purchase a business and has consulted you, and one point at which
you are asked to advise them is the average amount of working capital which will be required in
the first year's working.
X E§S> Y H§$nZr EH$ ì`mnma H$mo IarXZm MmhVr h¡ VWm Amngo nam_e© {b`m J`m h¡ VWm EH$ q~Xþ {Og na CÝh|
Amngo gwPmd XoZo Ho$ {bE H$hm J`m h¡ dh d{Hª$J H¡${nQ>b H$s Am¡gV am{e h¡ Omo nhbo df© H$s d{Hª$J _| Amdí`H$ hmoJr&

You are given the following estimates and are instructed to add 10% to your computed figure
to allow for contingencies:
AmnH$mo {ZåZ{b{IV EpñQ>_oQ²>g {X`o J`o h¢ VWm H§$qQ>O|grO H$s AZw_{V Ho$ {bE AmnHo$ JUZm {H$`o J`o Am§H$‹S>o _|
10% Omo‹S>Zo H$m {ZX}e {X`m J`m h¡& Amount for the year
df© Ho$ {bE am{e
(`)
(i) Average amount backed up for stocks / ñQ>m°H$ Ho$ {bE Am¡gV am{e H$m g‘W©Z
Stocks of Finished Product / {’${ZíS> àmoS>³Q> H$m ñQ>m°H$ 5,000
Stock of Stores, Material, etc. / ñQ>moa H$m ñQ>m°H$, ‘Q>o[a¶b, Am{X 8,000

(ii) Average credit given / Am¡gV H«o${S>Q> Xr h¡:
Inland Sales / BZb¢S> goëg 6 weeks credit / 6 hßVo H$s H«o${S>Q> 3,12,000
Export Sales / E³gnmoQ>© goëg 1.5 weeks credit / 1.5 hßVo H$s H«o${S>Q> 78,000
(iii) Average time lag in payment of wages and other outgoings:
‘OXÿar VWm Aݶ AmCQ>JmoB§½g Ho$ ^wJVmZ Ho$ {bE Am¡gV g‘¶ A§Vamb…
Wages / ‘OXÿar 1.5 weeks/hâVo 2,60,000

Stocks, materials, etc. / ñQ>m°H$, ‘Q>o[a¶b Am{X 1.5 months/‘{hZo 48,000
Rent, Royalties, etc. / a|Q>, am°¶ëQ>rO, Am{X 6 months/‘{hZo 10,000
Clerical Staff / ³brarH$b ñQ>m’$ 0.5 months/‘{hZo 62,400

Manager / ‘¡ZoOa 0.5 months/‘{hZo 4,800
Miscellaneous expenses / Aݶ 춶 1.5 months/‘{hZo 48,000