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Working capital

nidhi (student) (346 Points)

25 February 2015

While making the statement of estimation of working capital the Debtors should be taken on total cost or selling price?

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CA Neelam Maheshwari (internal Auditor) (497 Points)
Replied 26 February 2015

Working capital = current Assets - current liabilities. As Debtors are covered under current assets, debtors should be taken while calculating working cap.

nidhi (student) (346 Points)
Replied 28 February 2015

Yeah but on cost or selling price? (If units are given)

Harsh Singhal ( ) (81 Points)
Replied 01 March 2015

Hey Nidhi,

As per the definition of Receivables, it is an asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they include all debts owed to the company.

And the company takes debtors as total amount owed to the company i.e cost plus profit.

So you have to take it on selling price so as to calculate working capital.

Cheers