Description
ASSIGNMENT
Course Code : MS – 41
Course Title : Working Capital Management
Assignment Code : MS – 41/TMA/JAN/2023
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment to the coordinator of your study centre. Last date of submission for January 2023 session is 30th April, 2023 and for July 2023 session is 31st October, 2023.
1. Discuss the various factors that you would take into consideration before assessing the working capital requirements.
2. You are required to prepare a Cash Budget of XYZ Ltd. for the months April, 2023 to July, 2023 (four months) from the details given below:
(a) Estimated sale during 2023
b) On an average 20% of sales are cash sales. The credit sales are realized in the third month (January sales in March).
c) Purchases amount to 60% of sales.
d) Variable expenses (other than sales commission) constitute 10% of sales and there is a time lag of half a month in these payments.
e) Commission on sales is paid at 5% of sales value and payment is made in the third month.
f) Fixed expenses per month amount to Rs. 75,000 approximately.
3. As a Finance Manager, which sources you would prefer to raise short term loans from the money market for meeting working capital needs of your business and why?
4. The Balance Sheet of Alpha Co. Ltd. is as given below.
You are required to calculate the amount of maximum permissible bank finance by all three methods for working capital as per Tandon Committee Norms. Assume the level of core current assets to be Rs. 60 lakhs. Calculate the current ratios as recommended by the committee, assuming that the bank has granted MPBF.
5. If you are finance manager of an MNC, what circumstances would you consider using Eurocurrency markets? Also explain why you have selected these markets instead of borrowing from domestic markets.
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