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ANNEXURE INTRODUCTION: 1) What do you understand by Working Capital? What are the components of Working Capital?

Also discuss the nature and scope of working capital? 2) Write a detailed note on operating cycle of a manufacturing firm? 3) Explain the assessment of working capital requirements? 4) Explain the techniques used for the determination of working capital requirements? 5) What do you understand by aggressive and defensive working capital policy? CASH MANAGEMENT TECHNIQUES 1) What do you mean by cash management? Explain the various motives for holding cash? 2) Briefly discuss the factors determining cash requirements needs of a firm? 3) Discuss the various Cash management Models? 4) Define cash budget? What are the important components of cash budget? 5) Explain the different types of marketable securities? What are the reasons for holding marketable securities? RECEIVABLES MANAGEMENT 1) What do you understand by account receivables? What are the objectives of receivables management? 2) What are the various factors affecting the size of the receivables? 3) Define credit standard. Explain the different types of credit standard? 4) Critically evaluate the various collection policies and procedures? 5) What are the different policies for managing accounts receivables? INVENTORY MANAGEMENT 1) What is the need and control for monitoring of inventories? What are the objectives of inventory management? 2) What are the various costs and risks associated with inventories? 3) What are the various techniques of inventory management? 4) What is EOQ? Explain its significance. 5) Discuss the various inventory models. FINANCING OF WORKING CAPITAL 1) What is the need of financing of working capital? 2) Discuss the mechanism & cost benefit analysis of alternative strategies for financing working capital? 3) Write short notes on the following: a. Accrued wages and taxes b. Discounting of bills c. Accounts payable d. Commercial papers e. Certificates of deposits f. T-bills g. Factoring h. Cash credit i. Bank overdraft 4) What is the pattern and sources of Working Capital financing in India with references to Govt. policies?

TUTORIAL-I 1) From the following information you are required to estimate the net working capital: Cost (per unit in Rs.) 500 200 300 1000 Rs. 1500 p.a. 50,000/units p.a. Average 4 weeks Average 4 weeks Average 4 weeks Average 4 weeks Average 4 weeks Rs. 50,000/-

Raw material Direct Labour Overheads Total Cost Additional information: Selling price Output

Raw material in stock Work in progress (assume 50% completion stage with full material consumption) Finished goods in stock Credit allowed by suppliers Credit allowed to debtors Cash at Bank is expected to be

Assume that production is sustained at an even pace during the 52 weeks of the year. All sales are on credit basis. State any other assumption that you might have made with computing. 2) From the following particulars of R. Ltd. For the next year, you working capital requirements of the company. Annual sales Cost of production including depreciation of Rs. 3,00,000/Raw material purchases Monthly expenses paid in advance Anticipated opening stock of raw materials Anticipated closing stock of raw materials Inventory norms: a) Raw materials b) Work-in-progress c) Finished goods are required to work out the Rs. 36,00,000/Rs. 30,00,000/Rs. 17,62,500/Rs. 62,500/Rs. 3,50,000/Rs. 3,12,500/2 months 15 days 1 month

The firm enjoys a credit of 15 days on its purchases and allows one months credit on its supplies. The company has received an advance of Rs. 37,500/- on sales order. You may assume that production is carried on evenly throughout the year and the minimum cash balance to be maintained is Rs.25,000/-.

3) The cost projections for 2009 of a company are as follows: Raw materials Rs. 80/unit. Direct labour Rs. 30/unit. Overhead expenses Rs. 3,50,000/The other additional information available is as follows: a) The average storage period of raw materials will be 30 days. b) The average duration of production cycle will be 10 days and the required material will be issued to the storage department at the beginning of each production cycle. c) The average storage period for the finished goods will be 10 days. d) The company will sell goods to its consumers on 30 days credit. e) The purchases of raw materials will be made by the company from suppliers on 60 days credit. f) The purchases of raw materials will be made by the company from suppliers on 60 days credit. g) 25% of the average working capital will be kept in the business as cash. h) The management of the company has fixed output and sales target of 30,000/- units for the year 2009. It is expected that there will remain a perfect synchronization between output and sales throughout the year. Using operating cycle method, work out an estimate of the total requirements for working capital of the company for the year 2009. 4) Form the following information, calculate the amount of working capital required by ABC ltd. Using operating cycle method: Balance as on 1/1/2009 Balance as on 31/12/2009 Rs. Rs. Raw material 6,450/7,050/Work in progress 4,500/7,500/Finished goods 7,500/10,500/Sundry debtors 13,230/10,530/Sundry creditors 3,150/4,770/tualc Rs. 24,090/24,637.50/2,550/14,700/30,562.50/43,050/1,20,450/-

Purchases of raw material in the year Consumption of the raw material in the year Depreciation during the year Excise duty paid during the year Wages & manufacturing expenses of the year Administration and selling expenses of the year Sales during the year

Tutorial-II From the following particulars prepare a Cash Budget for the quarter ending to 30th June 2010: Actual Budgeted Particulars Jan Feb Mar Apr May Jun Rs. Rs. Rs. Rs. Rs. Rs. Sales 80,000 80,000 75,000 90,000 85,000 80,000 Purchases 45,000 40,000 42,000 50,000 45,000 35,000 Wages 20,000 18,000 22,000 24,000 20,000 18,000 Expenses 5,000 6,000 6,000 7,000 6,000 5,000 You are further informed that: a) 10% of the purchases and 20% of the sales are for cash. b) The average collection period of the company is month and the credit purchases are paid off regularly after 1 month. c) Wages are paid half-monthly and the rent of Rs.500/- included in expenses is paid monthly. d) Cash and bank balances as on April,1st , was Rs.12,000/- and the company wants to keep it on the end of every month below this figure but not less than Rs.11,000/-, the excess cash being out in fixed deposits in multiple of thousand. Estimate the cash requirement to Meerut Fruit Co ltd. For September to December 2009 on the basis of the data given below: Sales June 2009 Rs. 40,000/July 2009 Rs. 60,000/August 2009 Rs. 50,000/Sep to Dec 2009 Rs. 45,000/- p.m. Roughly one-fourth the sales are for cash 40% of credit sales are collected in the following ,month of sales , 20% are collected in the next following month and the balance are collected in the third month. Fruits are always brought for cash discount of 2%. The purchase budget for Sep to Dec 2009 was 12,000/- baskets per month at Rs. 1.50 per basket. Wages and salaries are estimated @ Rs. 7,000/- p.m. Other expenses for the period of Sep to Dec 2009 are as follows: Cash expenses Rs. 8,000/Depreciation Rs. 24,000/Administration Expenses Rs. 10,000/Selling Expenses Rs. 4,000/- (in Sep & Oct only)

From the following information prepare a Cash Budget for the month of January to April, 2010: Expected Sales Expected Purchases Month Rs. Month Rs. Jan 60,000 Jan 48,000 Feb 40,000 Feb 80,000 Mar 45,000 Mar 81,000 Apr 40,000 Apr 90,000 Wages to be paid to workers Rs. 5,000/- each month. Balance at bank on 1st January 2010 was Rs. 8,000/It has been decided by the management that:

a) In the case of deficit funds within a limit of Rs. 10,000/- arrangements can be made with the bank. b) In the case of deficit of funds exceeding Rs. 10,000/- but within the limit of Rs. 42,000/- issue of debentures is to be preferred. c) In the case of deficit of funds exceeding Rs. 42,000/- issue of shares is preferred. Prepare a cash budget for M/s Suraj Ltd. On the following information for the period Jan 2010 to May 2010: Sales Rs. Nov 2009 80,000 Dec 2009 70,000 Jan 2010 80,000 Feb 2010 1,00,000 Mar 2010 80,000 Apr 2010 1,00,000 May 2010 90,000 Jun 2010 1,20,000 Jul 2010 1,00,000 Additional information: a. Sales figure for Nov. 2009 and Dec 2010 are of actual sales where as figures for remaining period are of estimated sales. b. 20% of sales is for cash, 80% on credit receivable in the third month (Jan sales in March). c. Variable expenses 5% on turnover, time lag half month. d. Purchase of raw material 60% of sales of 3rd month. Payment to be made in third month. e. Commission 5% on credit sales payable in 3rd month. f. Fixed assets purchased in March for Rs. 50,000/g. Payment of advance tax in April Rs. 20,000/h. Cash balance on 1st Jan 2010 Rs. 25,000/i. Rent and other expenses Rs. 3,000/- paid every month.