1. Problems Working capital management (on estimation only)
1. a. Projected annual sales 1, 00,000 units
b. Selling price per unit Rs. 8 Pu
c. Profits on sales 25%
d. Average credit period allowed to customers-8 weeks
e. Average credit period allowed by suppliers- 4 weeks
f. Average stock holding in terms of sales requirements-12 weeks
g. Allow 10% for contingencies. Prepare an estimate of WC requirements from the following:
2. X co. is desirous to purchase a business and has consulted you to advice them on the requirements of working
capital in the first year with the following information.
Particulars Rs.
a. Amount blocked up in stock:
Finished goods 5,000
Stores & materials 8,000
b. Average credit sales:
Inland credit-6 weeks 3, 12,000
Export sales-1 1/2 months 78,000
c. Lag in payments:
Wages-1 1/2 wks 2, 60,000
Materials-1 1/2 mts 48,000
Rent royalties- 6 mts 10,000
Salaries -1/2 mt 67,200
Misc expenses- 1 1/2 mts 48,000
payment in advances:
Sundry expenses paid quarterly In advance 8,000

2. undrawn profits 11,000
3. G paints sell its products on a good profit of 20% on sales. The following information is extracted from its
annual accounts for 2007.
Sale at 3 months credit 40, 00,000
Raw materials 12, 00,000
Wages paid -15 days in arrears 9, 60,000
Manufacturing expenses- 1 mt in arrear 12, 00,000
Administration expenses-- 1 mt in arrear 4, 80,000
Sales expenses-payable 1/2 year in advance 2, 00,000
Income tax payable quarterly
(Last installment due in dec 07) 2, 00,000
The company enjoys one month’s credit from suppliers and maintains 2 months stock of raw materials and 1 1/2
months stock finished goods.Cash balance is maintained at Rs. 1,00,000. Assuming 10% margin find out the
working capital requirement.
4. Prepare an estimate of working capital requirement from the following information.
projected annual sales 1,20,000 units
selling price Rs.10 pu
percentage net profit as sales 30%
average credit period allowed to customers-10 wks
average credit period allowed by suppliers-5 wks
average stock holding in terms of sales requirements -5 wks
Allow 15% for contingencies.
5. Prepare an estimate of working capital requirement from the following information.
projected annual sales 80,000 units
selling price Rs. 8 pu
percentage net profit as sales 20%

3. average credit period allowed to customers-10 wks
average credit period allowed by suppliers-8 wks
average stock holding in terms of sales requirements -10 wks
Allow 20% for contingencies.
6. A Performa cost sheet of a company provides the following
Particulars. Element of cost amount per unit
Materials 40%
Labour 20%
Overheads 20%
The following further particulars are available.
• Activity level 2,00,000 units
• Raw materials in stock- 1 mt
• Materials in process- half mt
• Selling price Rs. 12 pu
• Finished goods in stock-1 mt
• credit allowed to debtors is two months
• Credit allowed by suppliers is one month.
Compute working capital requirements.You may assume that production & sales follow consistent pattern.
7. A Performa cost sheet of a company provides the following
Particulars Element of cost amount per unit
Material 80
Direct labour 30
Overheads 60
Total cost 170
Profits 30
Selling price 200
The following further particulars are available:
• Raw materials in stock- 1 mt

4. • Materials in process- half mt
• Finished goods in stock-1 mt
• Credit allowed by suppliers is one month.
• credit allowed to debtors is two months
• Lag in payment of wages 1 1/2 wk
• Lag in payment of overheads one month
• 1/4 th output is sold against cash
• cash in hand is expected to be Rs. 25,000
• Level of activity 1, 04,000 units. Compute working capital requirements. You may assume that production &
sales follow consistent pattern. Time period of 4 weeks is equal to one month.
8. A Performa cost sheet of a company provides the following
Particulars. Element of cost amount per unit
Materials 50%
Labour 10%
Overheads 10%
The following further particulars are available.
• Activity level 1,00,000 units
• Raw materials in stock- 2 mt
• Materials in process- one mt
• Selling price Rs. 10 pu
• Finished goods in stock-2 mt
• credit allowed to debtors is three months
• Credit allowed by suppliers is two month. Compute working capital requirements. You may assume that
production & sales follow consistent pattern.
9. A Performa cost sheet of a company provides the following
Particulars .Element of cost amount per unit
Materials 50%
Labour 15%
Overheads 15%
The following further particulars are available.
• Activity level 3,00,000 units
• Raw materials in stock- 2 mt
• Materials in process- one mt
• Selling price Rs. 20 pu
• Finished goods in stock-2 mt

5. • credit allowed to debtors is two months
• Credit allowed by suppliers is two month. Compute working capital requirements. You may assume that
production & sales follow consistent pattern
10. Texas ltd., is to start production is Jan 2005 the prime cost of a unit is expected to be Rs. 40 out of which Rs.16
is for materials and Rs.24 for labour . In addition, variable expenses per unit are expected to be Rs. 8 and fixed
expenses per month Rs 30,000.
Payment for materials is to be made in the month following the purchases. One third of sales will be for cash and
the rest on credit for settlement in the following month. Expenses are payable in the month in which they are
incurred. The selling price is fixed at Rs. 80 per unit. The number of units manufactured and sold is expected to be
as under:
Jan 900
Feb 1,200
March 1,800
April 2,100
May 2,100
June 2,400
Draw up a statement showing requirements of working capital from month to month ignoring the question of
stock.
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