Estimation of Working Capital Requirement

Tk. Tk.

A) Current Assets

1) RM 4500

2) WIP 13200

3) FG 16,500

4) Debtors or A/R 13,200

Total CA 47,400

B) Current Liabilities

1) Creditors 4500

2) Lag in payment of wages 2400

3) Lag in payment of o/h 1200

Total CL 8,100

Working capital requirement (CA-CL) 39,300

Solution to Problem 1
Statement of Working Capital Requirement

Current Assets: Workings Amount (in Tk.)

Stocks of RM for I month (1,04,000*80*4/52) 6,40,000
Work in process for half month (1,04,000*170*2/52)*0.50 3,40,000
(with 50% completion stage)
Finished goods for 1 month (1,04,000*170*4/52) 13,60,000
Debtors (78,000*200*8/52) 24,00,000
Cash in hand 3,65,000
Total CA (A) 51,05,000

Current Liabilities: Workings Amount (in Tk.)

Creditors 1 month (1,04,000*80*4/52) 6,40,000
Wages payable 1.5 weeks (1,04,000*30*1.5/52) 90,000
Overhead payable I month (1,04,000*60*4/52) 4,80,000
Total CL (B) 12,10,000
Working Capital Requirement 38,95,000
(A-B)

Notes:

1. One fourth of output is sold for cash thus, 26,000 units have been sold for cash, so credit sales
relates to 78,000 units only
2. A Year has 52 weeks