Page 147 - Corporate Finance PDF Final new link
P. 147
NPP
BRILLIANT’S Working Capital Management 147
CURRENT LIABILITIES
52,000 40 4
1. Creditors: 1,60,000
52
2. Outstanding Expenses
52,000 15 1.5
(a) Wages: = 22,500
52
52,000 30 1
(b) Overheads: = 30,000 52,500
52
Total of Current Liabilities (B) 2,12,500
Working Capital Required (A–B) 7,65,000
Illustration 2.3.3
Prepare a working capital forecast from the following information: Production level during
the previous year was 10 lakh units. During the current year, the firm is likely to maintain its
level of production at the previous year's level. The expected ratio of costs to selling price for the
firm is as follows:
{ZåZ{b{IV gyMZm go d{Hª$J H¡${nQ>b nydm©Zw_mZ V¡`ma H$s{OE… {nN>bo df© H$s Ad{Y _| CËnmXZ ñVa 10 bmI
BH$mB`m± Wm& dV©_mZ df© Ho$ Xm¡amZ g§ñWm H$mo {nN>bo df© Ho$ ñVa na CËnmXZ H$m ñVa ~Zm`o aIZo H$s g§^mdZm h¡& g§ñWm
Ho$ {bE {dH«$` _yë` go bmJVm| H$m Ano{jV AZwnmV {ZåZ{b{IV h¡…
Raw Materials / am° ‘Q>o[a¶ëg 40%
Direct Wages / S>m¶ao³Q> doOog 20%
Overheads / AmodahoS²>g 20%
The past date of the firm tells that raw material normally remains in stores for a period of 3
months before production. Every unit of production remains in process for 2 months and is
assumed to be constituting of 100% of raw materials, wages and overheads. Finished goods
remain in the warehouse of the firm for 3 months. Credit allowed by creditors is 4 months from
the date of delivery of raw materials and credit given the customer is 3 months from the date of
dispatch. The firm on an average maintains a cash balance of ` 1,50,000. Wages and other expenses
are paid by the firm with a lag of 15 days. The selling price of the firm's products is ` 10 per unit.
The firm also maintains a contingency provision of 10% in addition to the regular cash.
g§ñWm H$m nwamZm g_` ~VmVm h¡ {H$ gm_mÝ`V… am° _Q>o[a`b CËnmXZ Ho$ nhbo 3 _mh H$s Ad{Y Ho$ {bE ñQ>mog© _| ahVm
h¡& CËnmXZ H$s àË`oH$ BH$mB© 2 _mh VH$ à{H«$`m _| ahVr h¡ VWm am° _Q>o[a`b, doOog VWm AmodahoS²>g Ho$ 100% H$m
Cn`moJ _mZm J`m h¡& {\${ZíS> JwS²>g 3 _mh Ho$ {bE g§ñWm Ho$ do`ahmCg _| ahVo h¢& H«o${S>Q>g© Ûmam AZw_{V {X`m J`m H«o${S>Q>
am° _Q>o[a`b H$s {S>{bdar H$s {XZm§H$ go 4 _mh h¡ VWm J«mhH$ H$mo {X`m J`m H«o${S>Q> {S>ñn¡M H$s {XZm§H$ go 3 _mh h¡& g§ñWm
Am¡gVZ ` 1,50,000 H$m H¡$e ~¡b|g ~Zm`o aIVr h¡& doOog VWm AÝ` EŠgn|gog 15 {XZm| ~mX g§ñWm Ûmam ^wJVmZ
{H$`o OmVo h¢& g§ñWm Ho$ àmoS>ŠQ²>g H$m {dH«$` _yë`> ` 10 à{V BH$mB© h¡& g§ñWm {Z`{_V H¡$e Ho$ A{V[aŠV 10% H§$qQ>O|gr
àmdYmZ ^r ~Zm`o aIVr h¡&
