Determination of loan amount

You could use theMaximumPermissible Bank Finance method which consists of two method-

1)  Turnover method 

2) Working Capital Method
 

In case of Turnover Method- finace amount would be calculated as follows

A)25% of Turnover

B) 5% Of Turnover( Margin Kept by bank)

C)Actual Net Working Capita l(NWC)

d)A-B

e)A-C

F) Whichever is Lower of d or e---(Loan Amount)

In Case of working capital method  finance amont would be as follows:

A)Total Current Asset

B) Total Current Liabilities (Excluding Bank Borrowings)

C) Working Capital(A-B)

D) 25% of working Capital

E)Actual Net Working Capital

F) C-D

G) C-E

H) Whichever is Lower of F or G----(Loan Amount)