PIONEER INSTITUTE OF PROFESSIONAL STUDIES, INDORE

ASSIGNMENT
MBA III SEMESTER
61308 (F): WORKING CAPITAL MANAGEMENT
1. Explain Components of working capital in detail.

2. What is Working Capital? Is it essential for running business? If yes, Why?

3. Write a note on Operating Cycle or Working Capital Cycle, (Show with the help of Flow
chart), Also Provide formula to calculate operating cycle days.

4. From the following information of XYZ Ltd., You are required to calculate:
a. Net Operating Cycle Period.
b. Number of Operating cycle in a year,
Raw Material Consumed during the year 500000
Average Stock of Raw Material 50000
Work in Progress inventory 500000
Average work in progress inventory 30000
Finished goods inventory 800000
Average Finished goods stock held 40000
Average collection period from debtors 45 Days
Average credit period availed 30 Days
No. of Days in a year 360 Days

5. How to estimate the amount of different components of current assets and current
liabilities. (Give formula for each of the component)

6. Write a note on working capital management. (Why it is essential to manage WC from

the point of view of business)

7. What is cash management? What are the objectives of cash management?

a. What is cash surplus or cash deficit? (Explain with the help of Graph)
b. What to do when there is Cash surplus?

8. How to prepare cash Budget? Briefly describe the cash management techniques.

9. What is Inventory Management? What is Economic order quantity?

10. Briefly describe Techniques for Managing Inventory,

a. EOQ Model b. ABC Analysis
c. Pareto Analysis (Provide formulas and examples)
11. Give a brief explanation of methods for Inventory Management
a. FIFO b. LIFO
c. Weighted Average d. Base Stock Method

12. A Company’s requirements for ten days are 6300 units. The ordering cost per order is Rs.
10 and the carrying cost per unit is Rs.0.26. You are required to calculate the Economic
Order Quantity.

13. Explain all the three aspects of management of debtors:

a. Credit Policy b. Credit Analysis c. Control of Receivable

14. What are the Factors determining Credit Policy of organization? Which of these factors
are under Control of Finance Manager?

15. A Trader whose current sales are in the region of Rs. 6,00,000 per annum and an average
collection period of 30 days wants to pursue a more liberal policy to improve sales. A
study mode by a management consultant reveals the following information:-
Credit Policy Increase in collection Increase in sales (Rs.) Present Default
period (days) anticipated (%)
A 10 30000 1.5
B 20 48000 2.0
C 30 75000 3.0
D 45 90000 4.0
The selling price per unit is Rs. 3.00. Average cost per unit is Rs. 2.25 and variable costs
per unit are Rs. 2.00. The Current Bad Debts loss is 1 %. Required return on Additional
investment is 20%. Assume 360 Days in year. Which of the above policies would you
recommend for adoption?

16. What is Trade Credit? Write cost and benefits of Trade Credit.

17. Describe the Concept: a. Factoring b. Pledging

18. What do you mean by Working Capital Financing? What are different sources of working
capital financing?

19. Explain the following terms in details:

a. Cash credit
b. Overdraft
(Briefly explain Cash Credit vs Overdraft)
c. Bills Purchase/Discounted
d. Term Loans
e. Letter of Credit

20. What are the Factors affecting financing of Working Capital? What is Collateral security?