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working capital problem
Friends pls help me to solve this problem...........................
M ltd reqjuired to forcast its working capital for the yr 2004-05
Annual sales 65lakhs
% of net profit on cost of sales 20%
Average credit to allow to debtors 10week
Average credit to allow to creditors 4weeks
Avg stock carrying (in terms of sales required) 8weeks
Add 10% to computed figures to allow for contingencies.
ANS- 1604172
THANKS IN ADVANCE ( ITS URGENT) :)
Replies (3)
Current Assets-
Closing stock- sales*(8/52)*100/120 = 6500000*(8/52)*100/120 = 833333
Debtors- sales* (10/52)*100/120 = 6500000 * (10/52)*100/120 = 1041666
total current assets = 1875000
less:
Current liabilities-
Creditors- sales *(4/52)*100/120 = 6500000 *(4/52)*100/120= 416666
total current liabilities= 416666
Working capital = total current assets - total current liabilities = 1458333
net working capital = working capital + safety(contingency ) = 1458333 + 10% = 1604166.
At all places figure of sales have been converted into actual costs by removing the profit.
i.e by multiplying with 100/120...
thanks brother for ur time given in solving my problem..............
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