Disclosure-Working capital loans

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Querist : Anonymous

Querist : Anonymous (Querist)

12 July 2010 Dear Sir,

Please clarify the disclosure requirement of working capital loans such as Packing credit Loans/Bill discounting loans etc.,in case of an exporting comapany.

1.Whether it should be disclosed under "Current Liabilities" or "Secured Loans".

As it is paid back from the current assets realisation,and most probabily within a year,is it a current liability for working capital calculations ?.

Should we include it in current liabilities for the calculations of CURRENT RATIO.

Or sepearate treatment for "working capital" and "Current ratios".

2.Can it be considered as long term loans ,as working capital loans are treated as running account and when exhausted again availed and the amount outstanding at the year end may be kept more or less same level as the business is continued.

Please clarify the above points with regards to Schedule VI disclosure
requirements.

Thanks in advance.

vrnanda

vrnanda (Expert)

19 July 2010 working capital loans should only be considered as loan funds as per Schedule VI.

depening the facts of the case it should be classified as secured or unsecured based on the security offered.

though for the purpose of Sch-VI, it is long term depending on the period of loan.

Working capital loans shall be treated as short term loans, as they are payable on demand for the purpose of the current ratio.

Hope this is helpful.

the above opinion is personal and may change from expert to expert.

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