question11 question 13

current year previous year

raw material stock 1396468 1436494 net current assets or woking capital
work-in-progress 764004 810269
finished goods stock 1008623 982534
annual sales 6606401 6838825
receuivable 825050 807881
payables 276633 248710
annual purchases 3586900 4077527

inventory 3169095 3229297

receivables 825050 807881
current assets 7581045 8114705
payables 276633 248710
working capital 7304412 7865995

operating cycle and cash conversion cycle

current year previous year
DSO 45.583556009 43.118015887
DI 175.09074532 172.35320468
OC 220.67430133 215.47122057
DPP 28.149947029 22.263286055
CCC 192.5243543 193.20793451
next year working capital estimation problem 12
NEXT YEAR SLAES 528512.08
7134913.08
receivables 1016480.7676
inventory 3420848.737
current assets 4437329.5045
payables 276633
working capital 4160696.5045
 11-Dec Dec-13
rent assets or woking capital
current assets 696070 710890
current liabilities 244000 254000
working capital 452070 456890
cost of WC investment

calculation of WACC
share capital 245680 441780
reseves 1313860 1313860
net worth 1559540 1755640
loans 531520 654250

2011-12 2012-13
networth 1559540 0.16 249526.4 1755640 0.16 280902.4
loans 531520 0.14 74412.8 654250 0.14 91595
2091060 0.154916 323939.2 2409890 0.15457 372497.4

11-Dec Dec-13
day sales 5227650
day inventory
expected sales in 2013-14
receivables
inventory
problem 18

without Jit with jit

sales 1500000 1500000
inventory 250000 225000
days inventory 60.83333333 54.75
borrowig cost(10.5%) 26250 23625
saving onterest 2625

problem 20
current sales 4567000 5023700
account receivables 1143560 1464369
bad debts 35000 42000
dso 91.39465732 106.3947
cost of investment on rewciavble 10% 114356 146436.9
profit margin(9.75%) 445282.5 489810.8

net benefitt of the proposed changes

increase in profits(incremental benefit) 44528.25
increase in bad debts(incremental cost 7000
increase in cost of investment in recei 32080.94247
net benefit 5447.307534

problem 21
sales 555000 582750
dso 45 30
portion of sales availing discount 0 291375
profit @7.5% 41625 43706.25
amount of discount@1% 0 2913.75
investment in receivables 68424.65753 47897.26
interest@9.25% on receivables 63292.80822 44304.97

savings in interest(incremental ben 18987.84247

incrase in profit 2081.25
increase in discunt 2913.75
net effect 18155.34247