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working capital problem

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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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