29 April 2015
hi,I have a doubt in working capital management.In many of the practice manual sums they have calculated debtors on cost of production and not on selling price, they have ignored profit element while calculating it.for example
total cost-25 rupees
profit- 10 rupees
s.p- 35 rupees
they have calculated on 25 rupees.why so?
29 April 2015
The working capital component in debtors will be excluding profit. The profit is the surplus element on which no amount is spent from working capital.
CAclubindia
