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1. From the following information pertaining to X ltd.

, you are required to prepare forecast of Profit and Loss statement and Balance Sheet on that date: Paid up Share capital is Rs. 10,00,000. 8% Debentures are of Rs. 2, 50, 000. Fixed Assets as on date Rs. 6,25,000. Bank Overdraft as on date Rs. 1,81,250. Production during the previous year was 60,000 units. It is being expected that same amount of output will be obtained this year as well. The expected ratios of costs to selling prices are: Raw Material 60%, Direct Wages 10%, Overheads (excluding debenture interest) 20%. Raw material remain in store on an average for 2 months, Material remain in process on an average for a month, Finished goods remain in stock on an average for three months, Credit allowed by creditors is 2 months, credit allowed to debtors is 3 months. Selling price is Rs 25 per unit. There is regular production and sales cycle.

2. A limited company sells goods in domestic market at a profit of 25% on sales. Its annual figures are as follows:

Sales (Domestic 1 month credit) Sales (Export 3 months credit and selling price 10% below Domestic) Material (Two months Credit) Wages Paid (1/2 month in arrears) Manufactured Expenses (1 month in arrears) Administrative Expenses (1 month Arrears) Sales Promotion Expense (payable quarterly in advance) Income tax Payable in four installments

Rs. 12, 00, 000 Rs. 5,40, 000 Rs. 4, 50, 000 Rs. 3, 60, 000 Rs. 5, 40, 000 Rs. 1, 20, 000 Rs. 60, 000 Rs. 1, 50, 000

The company maintains one month stock of raw material and finished goods and believes in keeping Rs. 50, 000 cash balance. Assuming 15% safety margin, ascertain the requirement of working capital for the company (you can ignore WIP). Note: Assume Debtors on cost basis.

3. Following is the Profit and Loss account of Ultra limited: To Consumed Material 7, 00, 000 By sales
Rs. 12, 00,000

To Wages To Manufacturing expenses (including depreciation 36, 000) To Office and Admin Expenses To Selling Expenses To Distribution Expenses To Provision for Tax To Net Profit Total

1, 05, 000 1, 35, 000

90, 000 60, 000 45, 000 36, 000 29, 000 12, 00, Total 000

12, 00, 000 The companys policy is to extend two months credit to customers. The company maintains its inventories as under: Finished Goods 1 months of Sales Material 1 and a half month of Sales Work in Progress is equal to one and a half month of sales The company is allowed three months credit by supplier and all expenses and wages are paid with one month in arrears. Income tax is payable in advance in three equal installments. The company wants to maintain Rs. 80, 000 cash balance and safety margin of 20% on current assets is desirable. Estimate working capital requirements for the company 4. The projected Profit and Loss Account statement for the year 2008-09 is as under:

Sales Consumption of Material Labour Overheads Profit Following additional information

Rs. 36, 50, 000 Rs. 20, 07, 500 Rs. 7, 30, 000 Rs. 5, 47, 500 Rs. 3, 65, 000 is furnished:

The stock of raw material will be equal to 75 days of consumption

Stock of finished goods will be equal to 45 days of production Credit period allowed to sundry debtors will ne 60 days Credit period from suppliers is 50 days Time lag in payment of wages and overheads is 15 days The amount of cash on hand and bank will be Rs. 52, 500 30% of Sales will be for cash. Estimate the working capital required. Assume 365 days in a year. 5. The relevant financial information for Apex limited is as given below: Profit and Loss account data Sales 1000 Cost of 750 Goods Sold Balance Sheet data 2009 Inventory 110 Debtors 140 2008 120 150

Creditors 60 66 What is the length of operating cycle and cash cycle? 6. Consider the data for Dattatreya Company as follows: Current Assets Raw Material Work in Progress Finished Goods Other Current assets Total Current Liabilities Creditors Bank Borrowing short term Other current liabilities Total Rs. (million) 16 6 12 2 36 10 18 2 30

In view of above compute what will be Maximum Permissible Bank Finance in view of Tandon committee recommendations? Assume core current assets to hold value of Rs. 18 million. 7. The management of Royal industries has called for a statement showing the working capital requirement to finance level of activity of 1, 80, 000 units of production. The cost structure of the company is as follows: Raw Material Direct Labour Overheads (including Depreciation of Rs. 5 per unit) Total cost Profit Selling price The minimum desired cash Rs. 20 5 15 40 10 50 balance is Rs. 20, 000

Raw material are held in stock on an average for two months WIP is equal to half a month of production Finished goods remain in warehouse for a period of a month Suppliers extend a month of credit and Debtors are provided 2 months of credit 25% od sales are Cash sales. The lag in payment of wages is one month and lag in payment of overheads is half a onth Prepare working capital statement. Also state how much will be maximum permissible bank finance under the Tandon committee format (first two methods).