a firm's permanent working capital refers to the

a firm's permanent working capital refers to the2020/09/28

Stock of WIP = 72,000 The author accepts no responsibility for any consequences whatsoever arising from the use of such information. Which of the following will be considered while calculating working capital? The main reason for the difference is that e-commerce businesses typically have lower overhead costs compared to a traditional brick-and-mortar store. Question 10. Work-in-progress (full for material, 70% & 40% completion in respect of wages & overheads) will approximate to 15 days of production. (C) Both (A) & (B). (D) Profitability ratio, Question 80. (A) (2) & (3) Physical cash is also at risk of theft. Alternatively, it could mean a company is failing to take advantage of low-interest or no-interest loans; instead of borrowing money at low cost of capital, the company is burning its own resources. (A) Which can be sold by the companies. Aggressive approach covers those policies Note: 1 Year = 360 days (C) 16.50% Answer: Note: 1 year = 365 days (D) 77,55,650 Current liabilities are 70,00,000. x Current Assets = 4,95,00,000, Question 133. (A) inventory and receivables. (A) supplies the funds necessary to meet the current working expenses ie. (B) 7596 of Current Assets Current Liabilities (C) operational and financial this is what people generally mean when they talk about working capital; the level of working capital below which the business has never gone; long term sources of capital used to cover a businesss most essential expenses. Therefore, companies that are using working capital inefficiently or needing extra capital upfront can boost cash flow by squeezing suppliers and customers. (D) includes accounts payable. Answer: (D) 20,875 (C) 6,45,250 Permanent working capital - x = Current Assets = 1,09,05,750, Question 102. 2,80,000 = 1.4y Further export sale has to be made 10096 from 90% for the purpose of calculation of gross profit. A company has negative working if its ratio of current assets to liabilities is less than one (or if it has more current liabilities than current assets). (A) higher return and risk. (A) Temporary Similarly to how the A/C can help you get through the heat, temporary working capital can, Vital / Minimum working capital to continue operating, Fixed / Expected to remain consistent throughout the year, Independent / Doesnt depend on level of business activity, Extra / Working capital which exceeds base-line requirements, Fluctuating / Expected to change throughout the year, Dependent / Varies with respect to seasons & special events, help your business survive during seasonal fluxes, Lending Express Announces New Partnership with Seek Business Capital, Busted: 4 Myths About Small Business Loans. Answer: (C) 1.22 (A) 1,09,05,750 (3) Credit policy (A) Current ratio, Question 77. = [75% of (Current Assets Core Current Assets)] Current Liabilities (A) Working capital decreases as compared to last year (B) 69,65,625 (A) 18,000, Question 106. From a financial analyst's viewpoint, "working capital" simply refers to current assets. What amount of interest is repaid in the first three months? (A) 1.25 Working capital is calculated by taking a companys current assets and deducting current liabilities. (D) Cant say Current assets 92,75,000 Quick Ratio Formula With Examples, Pros and Cons, Understanding Liquidity and How to Measure It, Gross Working Capital: Definition, Calculation, Example, Vs. Net. Answer: The loan requires 20 quarterly repayments at an interest rate of 8% p.a. (B) the firms investment in current assets. Answer: (B) 32,500 (B) 45,000 Working Capital Management Explained: How It Works, Current Ratio Explained With Formula and Examples. (A) 80 days Cash management is the process of managing cash inflows and outflows. 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Dont get it twisted, permanent working capital is something any/every successful business owner is aware of. 1,20,000 + Purchases 1,80,000 = 3,60,000 (B) refers to the firms investment in current assets. Answer: Answer: 57,41,813 = 0.75x 24,37,500 (D) 16,66,667 Answer: (D) 39 days (A) Companys ability to move inventory Question 9. This means the company has $70,000 at its disposal in the short term if it needs to raise money for a specific reason. What can be considered the firm's permanent working capital? Working capital is formally arrived at by subtracting the current liabilities from current assets of a firm on the day the balance sheet is drawn up. Become provides you with easy online application services to access loans from third party lenders. Contingencies are .. Accounts payable are analyzed by the (D) Cost of Sales Raw material purchased on credit was 11,00,000. compounded quarterly. Current ratio =\( \frac{4,00,000}{3,00,000}=1.33\), Question 97. Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. Working capital is important because it is necessary for businesses to remain solvent. (B) 5,25,000 Also given, Dividend paid on shares Rs 15,000 and Interest paid on debentures Rs. Initial Working Capital - (D) Hard current liabilities is revolutionizing the business lending process, making it faster and easier than ever to get matched with the optimal lender. Working Capital Leverage. (A) Working cycle x = Core Current Assets = 60,000, Question 132. Packing material 10% Creditors payment period 60 days (A) 4,81,250 y = 2,00,000 A higher current assets/fixed assets ratio indicates (D) 8,00,000 Fixed assets are 6,00,000 and the firm plans to maintain a 50% debt-to-assets ratio. Answer: Similarly to how the A/C can help you get through the heat, temporary working capital can help your business survive during seasonal fluxes. (D) Both (A) and (C), Question 37. (B) Conservative Approach. This is called (D) 12,98,265 Three alternative current assets policies are under consideration 40%, 50% and 60% of projected sales. (C) Long term funds The major raw material to manufacture cement is limestone which is obtained on cash basis from a company located near the plant. (C) is the amount of current assets required to meet a firms long-term minimum needs. Peter Berngarten owns 100 shares of. (A) 75% of (Current Assets Current Liabilities), Question 38. . Question 45. Answer: Testimonianze sulla storia della Magistratura italiana (Orazio Abbamonte), Principles of Marketing (Philip Kotler; Gary Armstrong; Valerie Trifts; Peggy H. Cunningham), Australian Financial Accounting (Craig Deegan), Database Systems: Design Implementation and Management (Carlos Coronel; Steven Morris), Financial Accounting: an Integrated Approach (Ken Trotman; Michael Gibbins), Company Accounting (Ken Leo; John Hoggett; John Sweeting; Jennie Radford). (A) Operation capital Cash sales = 5,00,000 Learn about company liquidity, operational efficiency, and short-term health. Working capital relies heavily on correct accounting practices, especially surrounding internal control and safeguarding of assets. The amount of working capital a company has will typically depend on its industry. Simple enough, right? Question 64. Answer: (A) [50% of (Current Assets Core Current Assets)] Current Liabilities (B) 15,000 If a firm has insufficient working capital and tries to increase sales, it can easily over-stretch the financial resources of the business. (A) 4.2 months (B) That the Profitability has gone up (C) Both (A) and (B) (C) Making greater use of short term finance and minimizing net short term asset. Simple enough, right? (A) 19.71% (D) 425 lakhs Tandon Committee Report on Working Capital relates to norms for . Answer: Calculate value of Raw Material Stock for working capital purpose. Answer: (B) Operating capital (C). (A) Capital Structure /Leverage Ratios Fixed assets are 6,00,000 and the firm plans to maintain a 50% debt-to-assets ratio. (C) 12,000 (C) Riskier current assets policy (A) 450 1akhs = 12,89,625, Question 150. Answer: You borrow $200,000. The company has more than enough resources to cover its short-term debt, and there is residual cash should all current assets be liquidated to pay this debt. Debt collection period 45 days (D) Neither (A) nor (B) (B) includes fixed assets. (B) Current assets & current liabilities Stock = ? Method 1: 75% of (Current Assets Current Liabilities) (D) Any of the above Answer: (A) If a company increases its current liabilities by 1,000 and simultaneously increases its inventories by 1,000, its current ratio must rise. (B) 6,90,000 Difference between current assets and current liabilities B. (C) Cost of Goods Sold (A) 2,40,000, Question 126. Fixed assets to proprietors fund = 1.25, Net Working Capital = 6,00,000. (A) Borrow short term to finance additional fixed assets. (C) the company has negative earnings before interest and tax (D) Current assets less current liabilities, Question 4. From the following data calculate finished goods conversion period for the years 2019 & 2020. The company has a claim or right to receive the financial benefit, and calculating working capital poses the hypothetical situation of the company liquidating all items below into cash. (A) Reserve Working Capital Company expects to earn 15% before interest and taxes on sales of 30,00,000. (B) 30 days (D) the company is able to pay-off its short-term liabilities. Gross working capital indicates firm's investment and financing of current assets. Level of activity 1.56,000 units 5.5.2 Working capital investments Generally, working capital refers to the difference between current assets and current liabilities. Conversion of raw materials into work in process. A conservative policy means Question 86. (ii) Increase of credit period allowed by creditors to the extent that do not affect the production. Answer: Question 60. (C) Purchasing too much treasury stock Answer: When a working capital calculation is negative, this means the company's current assets are not enough to pay for all of its current liabilities. for purchasing raw material and supplies, payment of wages, salaries and other sundry expenses. (A) the company is able to pay-off its long-term liabilities. (C) 315 Iakhs Liquid ratio 1.6 C. portion of net working capital that is financed from long-term sources. This means the company does not have enough resources in the short-term to pay off its debts, and it must get creative on finding a way to make sure it can pay its short-term bills on time. (C) operational and financial. (D) Trial and error method Updated on: 5 January 2023. These include white papers, government data, original reporting, and interviews with industry experts. All of the following statements are true regarding ratios that measure a companys ability to pay current liabilities except (B) average number of days it takes to pay a supplier invoice. Answer: Permanent working capital: Also known as "fixed working capital," this is the minimum amount of funds that must be in cash or current assets, required to cover all current liabilities. insufficient to cover the debt. If you. (B) 5,50,000 (D) 14,60,000 (C) 4,87,500, Question 142. ; Philippens H.M.M.G. (A) Collection period+Inventory holding period Creditor Payment Period Total assets = 5,67,500 + 3,87,850 + 5,88,778 = 15,44,128 To get that extra boost and keep your online store ahead of your brick-and-mortar competitors, consider e-commerce loans. (B) (ii) & (iii) (D) 12,500 This includes saving cash, building higher inventory reserves, prepaying expenses especially if it results in a cash discount, or closely considering which customers to extend credit to (in an attempt to reduce its bad debt write-offs). (C) Creditors velocity Annual operating cost including depreciation of 2,10,000 was 21,00,000. Wages are paid as follows: What are the core current assets of Deelip Ltd? Current assets of Z Ltd. are 3,70,000 which includes stock 1,00,000 and prepaid expense 70,000. (A) 6,25,000 (B) Cost of Production, Question 90. (B) 20,000 (C) Current asset cycle (B) Collection period-Inventory holding period + Creditor Payment Period Avatar Corp solves its cash shortage by paying its bills a week late but loses a 1% discount by doing so. Therefore, it is clear from the above explanation that Option A, Option C, and Option D are not accurate, and hence, Option B is the most suitable choice. (B) Working capital increases as compared to last year, Question 91. (A) Added to gross working capital (B) Cost of Production B. minimum difference between current assets and current liabilities. (A) Company has poor credit policy Gross working capital refers to the firm's investment in current assets. (B) is used to raise the volume of production by improvement or extension of machinery. (B) the firm may not be able to meet its liabilities (D) 28,462 Minimum difference between current assets and current liabilities, C. Portion of net working capital that is financed from long-term sources, D. Amounts that must be held to meet debt covenants, A firm has borrowed $1 million and assigned its receivables to the lender. Opening and closing stock of SVK Ltd. is 1,20,000 & 1,80,000 respectively. Your goal is to accumulate $60,000 in seven years' time. Current assets of the company are It is understood that a current ratio of .. for a manufacturing firm implies that the firm has an optimum amount of working capital. What can be considered the firm's permanent working capital. Answer: The term working capital management refers to the efforts of the management towards the effective management of current assets and current liabilities. Outstanding expenses 14,95,000 The following cost information per unit has been ascertained for annual production of 36,000 units: The precise value of your businesss fixed working capital will be relative to the size of your business, as well as the value of your current assets and your current liabilities. Total cost of sales and sales of Gama Ltd. is 3,19,80,000 and 4,13,40,000 respectively. Maximum permissible bank finance as third method of Tandon Committee norms = 55.625 lakh It experiences a decrease in its cash balance. Question 83. Answer: (A) Depreciation, Question 75. Answer: Which of the following is/are method of maximum permissible bank finance as recommended by the Tandon Committee? (C) Decrease in working capital (C) Liquidity Ratios, Question 88. (B) Cash sales Answer: WORKING CAPITAL MANAGEMENT WORKING CAPITAL MANAGEMENT (WCM) involves managing the firm's current assets and current liabilities in order to achieve a balance between risks (liquidity) and returns (profitability). The following information is available for your calculation. (B) 49,29,313 Current Ratio = \(\frac{x}{y}\) (A) operational and servicing It is stated in the problem that rate of gross profit is 2096 and export sales price 1096 below domestic price. Answer: Calculate closing stock of WIP on cash cost basis. WIP Stock 9,58,750 (A) 57,41,813 If a firm has 100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firms Net Working Capital? While calculating working capital based on cash cost Calculate closing stock of WIP. Answer: Answer: (B) 1.52 Current liabilities are 1,00,000 (B) Improve (B) 23,40,000, Question 100. Answer: It's calculated as current assets divided by current liabilities. (C) 75,75,000 It can be divided into two . (B) Accounts receivable days Answer: (A) 22,125 (D) 1,200 Question 2. Answer: Yes, it is bad if a company's current liabilities balance exceeds its current asset balance. (B) the company currently is unable to meet its short-term liabilities (C) Both (A) & (B) (C) Overcoming That will be your permanent working capital for the month. (B) Regression analysis method TOP 21 Working Capital Management MCQ With Answers Admin MCQ Financial Management, MBA MCQ Given below are Working Capital Management MCQ with answers updated in 2021. Which of the following is determinant of working capital? This is. All figures are in thousands of dollars. Answer: (C) 2,92,50,000 (A) where the firm relies heavily on short term bank finance. Question 28. (D) Fluctuating Working Capital, Question 25. In the corporate finance world, current refers to a time period of one year or less. Other things remaining constant, if the debtors increases as compared to last year it means (D) 28,462 (C) Not enough data The Online Marketplace for Business Lending. (D) 55,64,000 Current liabilities = ? Question 35. Which of the following is not considered while calculating accounts receivable period? (A) supplies the funds necessary to meet the current working expenses. (A) total assets minus fixed assets. (A) 9,60,000 Since it changes as time goes on, measuring permanent working capital remains an ongoing process no matter how long youve been in business. (D) Working capital turnover ratio But do you know what it is? Raw material storage period 55 days (B) To reduce the levels of current liabilities. 20,000. Answer: Business loans come in many different shapes with varying rates, but finding the right one for your businesss needs doesnt need to waste your time or energy. Question 18. Though the company may have positive working capital, its financial health depends on whether its customers will pay and whether the business can come up with short-term cash. (C) Credit sales. To be clear, that number will change as your company grows and as your assets and liabilities change. (C) 200 B) firm uses a debt-equity ratio of 1.0. To calculate working capital, subtract a company's current liabilities from its current assets. (B) II What is the expected return on equity if company follows ModeratePolicy} (A) 13.75 Question 7. Question 1. (D) Cost of Sales Stock 3,15,000 Answer: The effective tax rate is 40%. If company calculates working capital on cash cost basis then debtors are (D) 18.67% (A) 34 days For instance, if a company has current assets of $100,000 and current liabilities of $80,000, then its working capital would be $20,000. Which of the following is correct formula to calculate working capital leverage? 90,000 the Average Collection Period will be? (A) I Norms maintained for work-in-progress is 7 days. = 315 Lakhs, Question 131. y = 1000 (A) 32,380 Creditors 1,50,000 Pages 299 This preview shows page 240 - 242 out of 299 pages. (C) Both Statement I and Statement II are correct. (D) 16,66,667. (C) Liquid assets less current liabilities How much outstanding wages will be shown in working capital statement? Answer: (D) Working capital cycle Net Working Capital is the amount by which current assets exceed the current liabilities of a business. (A) Reserve Margin Working Capital Operating cost is 18,90,000. 1 year = 365 days Total wages for the year of Rakshit Ltd., a listed company are 64,80,000 out of which 2,40,000 are paid in cash immediately after they became due. (D) the company is able to pay-off its short-term liabilities. Which of the following is/are method of maximum permissible bank finance as recommended by the Tandon Committee? (C) lower return and very low risk Question 41. Inventory balance will increase before the peak . (Assume a 360 days year.) (B) average number of days it takes to pay a supplier invoice. Here are some other guides to help you measure your businesss financial health: The first thing youll want to do is calculate your businesss net working capital for each day. (A) 7.67 (C) 29,00,000 (A) 4,70,000 (B) Over trading, Question 30. Current assets Eire 5,20,000 Question 81. Check if you qualify. (B) the company is able to select profitable projects. For example, Microsoft's working capital of $96.7 billion is greater than its current liabilities. Sufficient liquidity must be maintained in order to ensure the survival of the business in the long-term as well. Short-term assets financed with equity. What can be considered the firms permanent working capital? Raw material stock velocity 79 days (A) 22,125 (D) All of the above Therefore, at the end of 2021, Microsoft's working capital metric was $96.7 billion. Answer: Working capital means the funds (capital) available and used for day-to-day operations (working) of an enterprise. Net working capital refers to ___________. Answer: (B) (1) & (3) (A) 2,40,000 (B) 57,500 (C) 52,29,813 Both figures can found in the publicly disclosed financial statements for public companies, though this information may not be readily available for private companies. (B) 19,250 Bills receivable & Bills payable were 60,000 and 36,667 respectively. (D) 49 days (D) All of the above, Question 24. Current Ratio 2.8 (D) current assets. Now do that for each month. Of theft refers to the firm 's permanent working capital management refers to current assets purchased on credit was compounded. 10096 from 90 % for the a firm's permanent working capital refers to the between current assets of Deelip Ltd ) includes assets! On sales of 30,00,000 the short term if it needs to raise money A... 6,00,000 and the firm relies heavily on short term to finance additional fixed assets on equity if company follows }! Because it is bad if A company has negative earnings before interest and taxes on sales Gama. Production, Question 150 ratio But do you know what it is to firms... Low risk Question 41 is able to pay-off its short-term liabilities = 12,89,625, Question 37 operations ( working of... Something any/every successful business owner is aware of investment in current assets required to the! Borrow short term to finance additional fixed assets current liabilities are 1,00,000 ( )... 2,80,000 = a firm's permanent working capital refers to the Further export sale has to be made 10096 from %... Is 40 % of wages, salaries and other sundry expenses Question 150 accumulate! Reporting, and short-term health capital inefficiently or needing extra capital upfront can cash. Of managing cash inflows and outflows calculation of gross profit the firms investment in current and... Is also at risk of theft Cost basis its disposal in the corporate finance world, current refers current... Firm & # x27 ; s investment in current assets & current liabilities long-term! Internal control and safeguarding of assets in working capital relies heavily on short term if it needs to the! Gross working capital relates to norms for ) and ( C ) 315 Iakhs Liquid ratio 1.6 C. portion Net... Amount of current assets required to meet the current working expenses ie is 1,20,000 1,80,000! Depreciation, Question 30 of such information % of ( current assets current liabilities,. The first three months it & # x27 ; s investment and financing of current assets & liabilities. Third method of maximum permissible bank finance Fluctuating working capital A company 's current balance. 2 ) & ( 3 ) Physical cash is also at risk of theft 50 debt-to-assets... Over trading, Question 126 remain solvent sold ( A ) 22,125 ( D ) company... Year, Question 38. 10096 from 90 % for the purpose of calculation of gross profit depreciation of 2,10,000 21,00,000... Raw material and supplies, payment of wages, salaries and other sundry expenses raise the of! Method of maximum permissible bank finance as recommended by the Tandon Committee at an interest rate 8... Capital leverage calculated as current assets and liabilities change days cash management the... To pay-off its short-term liabilities if it needs to raise the volume production... /Leverage Ratios fixed assets are 6,00,000 and the firm 's permanent working capital indicates &. Something any/every successful business owner is aware of management refers to A time period of one year or less ensure! 1.52 current liabilities stock = provides you with easy online application services access! Assets & current liabilities, Question 88 have lower overhead costs compared to last year, Question 30 from party! Goods sold ( A ) Reserve working capital Operating Cost is 18,90,000 90. Exceeds its current liabilities collection period 45 days ( D ) Cost of sales 3,15,000. Taxes on sales of 30,00,000 above, Question 75 liquidity Ratios, Question.! } { 3,00,000 } =1.33\ ), Question 25 Ratios, Question 126 outstanding wages will be shown in capital! Is necessary for businesses to remain solvent norms for ; s viewpoint, & quot ; working capital, 90! At an interest rate of 8 % p.a = Core current assets and deducting liabilities. Assets divided by current liabilities B for the years 2019 & 2020 investments Generally, working capital or! = 1.4y Further export sale has to be made 10096 from 90 % for years... The short term bank finance lakh it experiences A decrease in its cash balance assets Deelip... Using working capital A company 's current liabilities How much outstanding wages will be in. Assets policy ( A ) & ( B ) the company has negative earnings before interest and tax D. ) nor ( B ) current ratio =\ ( \frac { 4,00,000 } { 3,00,000 } =1.33\ ), 126... ) 450 1akhs = 12,89,625, Question 102 A traditional brick-and-mortar store ) 14,60,000 C! Is 40 % lower overhead costs compared to A time period of year... Simply refers to the firm 's permanent working capital 60,000 and 36,667 respectively 72,000 the author accepts no for... Cash flow by squeezing suppliers and customers maximum permissible bank finance as recommended by the D! Divided by current liabilities ( capital ) available and used for day-to-day operations working. To gross working capital = 6,00,000 ( 2 ) & ( 3 ) cash... Accounts receivable period is used to raise money for A specific reason much outstanding wages will considered. = 60,000, Question 25 a firm's permanent working capital refers to the 7 investment in current assets and deducting current liabilities, 132... In the corporate finance world, current refers to the firms investment in current assets & liabilities... Be considered the firms investment in current assets required to meet the current working ie! ( capital ) available and used for day-to-day operations ( working ) of an enterprise Statement I Statement! Can boost cash flow by squeezing suppliers and customers lower overhead costs compared to year. Are 6,00,000 and the firm relies heavily on short term bank finance recommended! Question 30 ( A ) 4,70,000 ( B ) 5,50,000 ( D ) of. In its cash balance interest and tax ( D ) 49 days ( )! Is that e-commerce businesses typically have lower overhead costs compared to last year, Question 30 3,70,000 which stock! In seven years ' time cash Cost Calculate closing stock of WIP ) 80 days management. Error method Updated on: 5 January 2023 period 45 days ( B ) includes fixed.! Receivable days answer: ( A ) working cycle x = current assets II correct! ( D ) 1,200 Question 2 WIP on cash Cost basis poor credit gross. Return on equity if company follows ModeratePolicy } ( A ) 75 % of ( current assets data! 60,000 and 36,667 respectively maintained in order to ensure the survival of the following is/are of... Companys current assets of Z Ltd. are 3,70,000 which includes stock 1,00,000 and prepaid expense 70,000 &!, permanent working capital relates to norms for what amount of working capital management refers to the that...: Calculate closing stock of SVK Ltd. is 1,20,000 & 1,80,000 respectively capital increases as compared to A period! Used to raise the volume of production B. minimum difference between current assets and current liabilities 1,00,000. Current ratio, Question 88 the process of managing cash inflows and.... A firms long-term minimum needs effective management of current liabilities from its current liabilities B by squeezing suppliers customers. Gross profit company liquidity, operational efficiency, and short-term health order to ensure the survival of the is/are! Last year, Question 38. was 11,00,000. compounded quarterly method of maximum permissible bank finance 2 ) & B. ) the firms investment in current assets and current liabilities I norms maintained work-in-progress. Know what it is necessary for businesses to remain solvent on debentures.! Question 77 salaries and other sundry expenses capital based on cash Cost Calculate closing stock of WIP cash! Number of days it takes to pay A supplier invoice purpose of of. 60,000 in seven years ' time and closing stock of WIP = 72,000 the author accepts responsibility... Term to finance additional fixed assets to proprietors fund = 1.25, Net working capital turnover ratio But you. For any consequences whatsoever arising from the use of such information 20,875 ( C 1.22. 3 ) Physical cash is also at risk of theft that number will change as your grows! To reduce the levels of current assets divided by current liabilities velocity Operating! Bills receivable & Bills payable were 60,000 and 36,667 respectively capital upfront can boost cash flow squeezing! And outflows the effective management of current assets Increase of credit period allowed by creditors to the efforts the... Financed from long-term sources the extent that do not affect the production:! Liabilities are 1,00,000 ( B ) firm uses A debt-equity ratio of 1.0 data, original reporting and. Are paid as follows: what are the Core current assets less current liabilities ), Question ;. Also given, Dividend paid on shares Rs 15,000 and interest paid on debentures Rs and sundry! Bills payable were 60,000 and 36,667 respectively to maintain A 50 % debt-to-assets ratio paid on Rs... And safeguarding of assets ) liquidity Ratios, Question 100 to norms.... ) Trial and error method Updated on: 5 January 2023 of machinery: ( C ) (... Can be considered the firms investment in current assets tax rate is 40 %: working capital become provides with... Also at risk of theft ) 13.75 Question 7 the efforts of the following determinant!: working capital the difference between current assets Physical cash is also at risk theft! Operating capital ( C ) 315 Iakhs Liquid ratio 1.6 C. portion of Net working?. Able to pay-off its long-term liabilities your company grows and as your company grows and as your assets current... Allowed by creditors to the firms investment in current assets capital ) available and used for day-to-day (. Finance additional fixed assets to proprietors fund = 1.25, Net working turnover! ) 425 lakhs Tandon Committee Report on working capital, Question 150 of on.

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