nq_Capital_ Management | = see? ca RS Work in process omen Nt Production process working pital fs that pox Lion al oN Capital ta ich represent s uplde see Current asseds over cutrent ist lity Th_cash reg dling —~ business that means purchase of to moterial conversion their an fy aS s. Reqular business fs termed Q working capital. There -aie_2 components ‘) currend Assets aye. Bibietidy Current Liability Excess of Company's corrent access: th Current Over curren} biabibity fig woskis Capital 7 3 Working capital also yeferred as revolts Capita) reulatin vr Short term Capita waineking capifal cyrleom pletion of. Ww materials —Pigecd , sale [as aperatin | — oer king cop r_|__company rt | Types of working capital. oe Tae | ned warking capjtal_- (diff bel” current asse} & I current Habrlidies) 2. Gross walking capital im 7 | - Value of curpend asset ral Permanent sworlsing capital (Regular) ‘Min _ami_of curren} assels_pecded conducl_busss h dluating duller Season sf Year { ition. LY arable Working capit ) Lx. at = add al currend assels Temporarily to eC} n Factors determining working. capital Lil tptérnal factors [h size’ of business ii) Nature & type af business (a) production: policy \ W) Oredid policy |) Raprdity of! Tusnover Term of purchase and Sales. |__External Factows . 1) Seago’ rior Au) Tan de cycle. iii) ‘Technological develop mesh. iv) ‘Taxation policy Pe |e xamples unit 3 Bright “Meals Ltd considering tu) r ld tonaidétiag Line aig ___[Gnvestment pro atte Unde se Portreulars A 8 Investment (co) 3500 20006 2 LExpected c2 4000 8000 or { 4000 8000 a i Soo 12000 2 [ o | Suggest the most attractive Psat on the S I basis of NPy, pz and p, payback | period method. I that cost of cap ital Is |2sh e j Considering ae Sel": Year A Bo Spyve 4 8B _— t 1 4000 2000 Eqs reed Fis ae Be 4800 R000 8-852 soy 668 ee I 3 4S00 2000 0.204 3190.5 950 S t oem t Tota) A= 9942.5 - ao tl a - Jota) 8 = ganja Ee [ner Invesimant of woe oF A= 9942,.5-9500 = 4uas : eee P%A 2 L.04es —~ Profitabil) ty Index of proj A= 1.1006 —~ } a aeNVESLIT PVE dds planning ani projects The—campany —has dnvestinent—al tonne ies Particulars Investment Life \ coat_at capital Cash Infloms—aj_end ——\_ of yas. psec aren a #,00,0.00 800,000 ____to,00,000_ ____8,,00,.000 __. a 9,060,000 200,000 s & 100,000 £100,000 414.00, 000 § 00,000 6 2,00,000 d_which project the com pany should select __qnd__a lso_advice on_basis_of i __payhackpetiod _.NPV_4-PT& IRR. 4 _proj-A-Lea) Proj-A(cO) _prajla) CCT) praj-(B) (co) &,0.0,000: _|_ 2ooaa0. 7-10.0,0.0.0. 2,006,000 _||_10,00,00.0 123,0.0,000. 8 ,00;000 816,00,000 9.,-0.0,000. +26,00,000 __8, < 24,0 |__§.,00.000 34,090,000 200,000. 32,00,000 |_4,00,000 985, 000. + 6,0.0,000_ 3 8,00,005 = 2,000.00 40,000,008 | yojbatk potiad for A tet Se estbee B,00,000 = 0.5000 pay b: oe = 34 6,00000 = 4.7506 B,000002 oon 9.00_8,00,000 0.709 33109 pabyoaa 5,00 000 0.6383 So6yoo pecs 6100}000 0-565 226599 = 2,09000 0.504 = EA = 2790900 Be 63800 Net NPV of 4 = 2091 009 NPV of B =_/3¢2000 = PI of 4 = AEBEG 0.9303 ce Pl fev s\70.9586 figs ye i = : ns : 5 rc | 10 ied aia i tee dusting the piejeck-are aa apetsd ob lit e year: 4d 2 3 4 e 20,000 0,000 40000 Go00y 30,08 i cet Big a— so.n00 293 a ase a 207 Tp 3 40,000 __.e.3/2__ae “__68,00 gaé 31 soa IS _20,000 9-8 67___1pl0_ 4} 0,006 7 1400 i whflow = 119060 | 1oo0000 { NPV = 19060 [pi = 19,060 = L.l90e : 1, 00,000 L i l | payback penied = 2 10,000... .= 38.2 5,000 at | unit 5 : — _Outsourcing : ! t . - Advantage disadvantages of -outsourel ng ee Cash Management i Ecommerce & its Types + | ELMin cash Balance XXKX Inventovies : Raw Material xxx Wark in process!) xxx Finished goods xxx A Receivables Debdtors XXX Bills Xxx XXX Cross working Cap. (Total of. curren} Assels) For Mapfacturing Concerns) Current Lfabilities Amt Amb. Amt Creditors for purchases ERR ex Peedidaes tase wie, OO ay Creditors £, ax_ovethed xxx Tota) srteol Liabilities ex axa ) current S01 ae ten table ee Safe; i s vf WANKJ Ee | concer! —T |__ ivy Advance payment if, any si i i others | To curre| moeks: CA) oo te ge ee | 5) current Liabilities ths |_ ii) Lag in payment expenses £ — Total _of parent Liabilities (3) 2 working capital (A-B) Add : Provisi¢ of Co) Ne} working Cap jtod Required capital ie Poe pare an estimate of wowking ~ ypfosmation of t Regul " jrement from the -fo lowing tradfin 1,000,000 unis a\_says sales LL i project annu ii). saling pace iii percfniage ne} prof Rs- per unit é it on Sales as cle.ae Customer - Debtors Supplier - Crediftoss Pooeny ey iv A edicl_pertod allowed to cus, ome, NX i by pein clue do su pie ili ah stack holeli Fe eg (if in week then cong ider 52 weeks ay eat SolMe L_ Wotking Note: ee i Cost of sale = sales - profil nee | I FR - 25 ¥ 39, 300000) loo = 800000 - 200006 3 = 600000 ia Estimation of wor king Capital itstatement shoud gs A calewlat fons working Capitale. Particulars t A) current Assels i) Cash 6 Debtors: 000000 % 9 92308 552 Stock G00000x 12 1,383,462 Sas 230,770 Total of current Assels B)less Current Ligbilities Creditoxs ¢o0,000x 4 te Gesu 9 — 52 t leg = - Wek wanking capital We 84r616 Add 10-10 cont igen [ee nat a Net working capital Requiet = 203/078[Fame eo hoo AL Cerapany provides. the following dada Pasticylars cost per unid in RS Raw Materia) DG in) Divect Labout E 8 verheads ss gti bS © ssl Total cost 43 —I Add profit z ! selling pujce 50 —~ | —h The Following js addi® info available —[L Avg Raw materia) in Stock- | momth Ava works in pyocess = 12 month Finished qoods: Instock —_-opAvg-1 month Credit allow +0 Debtors = 2 months. | credrt al owed by suppliexs = |imonth - qimelapkin paymerd of wedges -. |. month Tabnelack fn pay meut of averbeads — Lmonth cash balance i expected £07 2-week-9J 90,000 | you ave zequired fo poepart S showing ws wovking needed. Finance jobe| of activi £52000 wets Of oukpub _as per total apfoach method_of wowing capibal . estimation. Sol fl Particulars B statement Showing wobking Capita) needed.Particylars AL E 7 : stork of RawMaterial “52000 x 20% | BE65 Fe 3 ee Avg work in process 32006% 207 0.8 49333-43 Th ly 1) Row material 20 43333 83 9993 95 it) Dinecd labous_s 17393 Ni) OVerheads 15 32500 i Einished goods in stock (48 x 520008 ) 186,339 a “hal a Credit allow +o Debtors (ebiars) 4333839 3 Cred i4—allow-by- suppliers. Cash Balance! 40,000 Total current Asses (a) 8, 29,494 8) Current Liabilities credit allow by sy lier Credits). g¢ f 12% 52000 xao] Pree Meds) ggg? L abating Wedges Suegp yp gaat 2 pee ni Overhedds Sten — 26 5000. Tot ilitiey 6 8 Net working capital Regul 03l6s- E CA-B) ;mam qa Proforma the foWowing data Pasticulars Rs Tf. Raw Material lo Sa Disect labour (wedges) y i) over heads 6 Total cost 20 Add profit 5 selling price 25 The following is addi” info available Avg Raw materia) ip stock -__| month A 1k in pyoces. = 2 month —Trinished goad in_ stack mente —— TT credit alin to Deblors __— 2 mend —— credit allow bi esuppliers = menth ——— Lmonth Tymelack pay meud of wedges - cS Timelack in payment of overhtads - | month = 25000) Cash Balance iS exp to : you are sequired +o prepare stakemed showing wor kiha if needed- to finance d Label of activity of 40.000 units sf pet total cost appsoach ‘of working capital a estimation yor art aqssyme thed productian fs_casried on evenly yproughoul the year and wedges & overheads. aectut pare part estimation for working capital f| 40,000 X 1OX 1 i 12 ' - ~Aiig wii “in_pipees —e e 840,000 x 10X 0.5 : i e a 1) Raw material 101666 I 4 13335:3 S66 6F 11) divect labour ¢ Is ii) overheads 10000 = daaay ~ | | Finished goods in Stock 6666646 mae j eis A 2s | credit allow to debtors 66 ST] veselling pice) leseee Cash Balance 25000 ! Tota) Current Assets =) 325004 | 18) curreud Liabilities l li credit allow by Supplies 33333. | ya ¥ 40,000 ¥ 20 ) | dt J Tidousstanding wedges [sees aed ti andi: mouistanding ouetherds 96900 20000 Total of current Liabilities (a) S—> 66666 Net working Capital(A-B) => 959335 [ 425901 -@666]a The [Link] rue ture of compa ntfs prod we L 1s follo, is : __ Particulars cost per unit © w_ Material ae 20 ivec} Labouy s ip overheads. Is v) Tontcost of prod 1 HO : yy Add profit lo : iy Selling pace 50 is 240,000 units — the_-annual_ producti ao is_policy of company to mainiain stock | of youn martertals—eq une | producti TT Half months jgreduetion will remain in proces of compledion Sore) (5 “0 | through outh the year [stage i i L i avercia v ad on_credit_ and allows 2 mobths credit i jis _customers_ A i ides 8 mor = of 1a | eredlit +o Compeay __|- “The peried of Mik fr weelge and overheads | is One month —__ [Fin cab balance Rs 25000 is expected +o | be maintain al ined v patemett —[Link] 28g i f 7 Salts Particularsat 2)__ Ay 2509s 1SS 1) Raw Materfal _ 2,40,000x20x0 ‘ 20000, 2500 FS5000 i Dix bout aRx 5x 40-5 oy ii 240000x ISX 0-5 » 50 2 106 i i 240000x 4ox | 12Le ies From following info prepare, Statement ¢ sh | working raypeital —_| Budgeted sells ____2.€0,000_ per anura GOEL | Portieulay z Hn Raw Materia) 0-30 i i ‘ li) overheads 0.20 _ iv) Tota) 0:90 u) profit 0-10 vi) Sells 1-00 Tt fs assume thal i) Raw materials are carried in stock for 3 weeks and Finished goo cs for a week. iy ctovi sin 3 we iii jer i \ redit iv) customers wil) wtquire @ week credit - ¥) #1 may be assume that pvoducH op ord taken of 4 ey 209 overheads axe 4 Deb Cfo debtors 0-9) 60)”. Pos ticulars z sa A) current Assebs Stock of Raw Materia) 4500 260,000 X 3 y 0-30 52 1 Raw Madert al peecttaieoy 2» ip--drrect tacbotry 2 60000 X OOK 000 thist “overheads 3009, jas09. ii) Finished goods gooo 260000x 2 a4 0. 2 iil) work i'n proces afseseemnemecstesete Partioulays credit allow hy debtor 260,000x 8 aoa Totat_of ~cun ent Assets|____| 83005 —~ } 82000 |b) currend Ligbilifies i allow suppli er 41.260,000x5 ¥ 0.30 Sa 4500 lies _ouy eg Net ‘wosking caprtal CA-B) 63000-7500 = 55500Sy \\ ye ine | eequizement for year, 99 |) estimat uipul for yeas ee |a) ¢ Bhajical Slory of Paw mpakerics [material in-process rotjo of wed 25nd overhead [ 2) Efnished goods retains ta. in Acsoge 4 | weeks. ____—______— [soned ions 5 fe eblous iB oui standing wedges & overhesde -_ x). Selling peice f per unit ls) analysis of cost per upit os pelow) | Paw) Material 2 p-unit Labous _' + 3 p+ upjk overheads - 2 p-ursb porofit = 5 po upd Assume the operajions. ave evenly spread re ughoul_the year Solf Particulars < = 1 | A) current Assets 5 le I — aeet pais maltiol lesa 2500p | —] 1 80,000 x5 AD [| J etiredt le | i) Tobour Cwedges) fuss 7500 1 130,000 % 3 x 2». ba 52 a || ili) overheads “4 ae Bn e | pene sie T4560 37500 aS = a4 Partreulars Les ished_goods_=______ — “ 1,3000x 10 x 2 Sa oe ae comider | credit allow to debtor “total ceo GS) } 3,30,000 x 18 x 4 Bo | Ba Dee a | ge 4 Cash Balance ee i] et [B) current Lrobrlities f redttor es) “sl Se ti Horredit atime bye) Be I 4 36, 4 : a ; 5 , 1) Creditors — profit 1. (1,36,000x% 5x aay Se s lij_wedges oustanding - tf -————_}_11.30,000 y 3 y ay 1, 50.06% RB Sia Hi i pop budstand ing overheads {41,320,000 x 2% 2 y 527 Winb= > = = t “nh suarking Capiio} Peoniremast ot Gre sume ele bx cesinto ps pore c1ssu lode provision for contigancy to you c ded Sed f i Particular cost per unit = 1) Row Moteria) 50 £s 2). Dizect labour 5 overheads 20 ota} cast gs [Additional infor 1) selling pstce 2) Raw Thalerial kerk Instexse op on aya 3 | 3) Finished goods remain instock ave em 4) unite ave expected +6 be in prod” ervass on 1. an avg Va mentt s) Credit allowed to cu Jomers. is 2 months . 125 Rs Te) credit allowed bu susplicr is = mort | Sao 1 11) pirect Labour =125600% aoon00x I5 x 0.5: ins Slip overheads | 200000 X 20 x | = $168,334Particulars be AS “a Cash Balance Fie B) Curren} Lighilities yy Credit allow by supplier 6 & % 3: 2Nnn0O xX Dy 2 & “(Raw material) 12 | ii wedges outstanding 250000 | 12 ‘ iy Suistanding averheade _gaaaaa 200000 y oO ee wo ee | labilitias B 525006 2250000 — Netuorkl ng Capita) Vs gouresd Add tole combigencies ZOU yoy => ® goaice. GOW) 667 + ui? peesIL tse Brom [40 estimate networking capital Additiona) info $ es 8) i) selling peice - i) out put iii) Row) material jp stock 4 ee! jv) Work In _ptogress (5022 of Com DZ we t Slage with Fu TIL pastors || Y) finished goods in stock. * viy credit allowed by uppliers rea PI credit allowed 4p debbors carb a} bawk SG COGS Ascume thal a production i urrjed out everdy J e 52 meeks « lyeat throuqboud thes year. assum [Link] are on predict basis. Particulars = = 5) Current Assets BRIE COGCO Stock. of Raw Material. 520005 BY y SeSed HOO _wovk In: process : i) Raw Material. Sooe0o it) Ditect Labour Sau JE s2000x £4 3% 190 oe Eeosees 15ca60iii) overheads | s2000x 2.4 | y 300 Sa =z ___Finyshed goods | s2on0y 4 y» 250 Ez credit allow by debtors || sao00 xe y 950. 200000 3400009 6800000 I 52 H L3t.0o {By current trabilities I ? credit allow by Supplies / 4X 52000 x 400 1600000 $2 Networking oPage No. elt I profit Io elling ayice mee Additional info Min desired cach ener, Rs 20, Raw: Material held in stock py Sma WIP assume Sd*/* Completion stage wi/} xemain in process fer 2 month . Eingshed good remains in warthouse =| month, Suppliers ‘Of material extend a manths oredit _ aad. debtors are provided 2 monts credit of wi SS ont & 1/2 Month incase of overheads fram_the above Fact you are required +o pat pare tec soppy Spoinlng tibadeing cap tha) Require ment Sol Particulars z = lA) curren} Asseks Stock of Raw Material €00000 lgo000¥Y 2 20 12 work in process i) Row Material 350008 180000.x 0.5, 156000 12 eT 18.750 + beg ne (goood x OS ylyIG 56250 ze ELbas af — aI x a q Finishecl goods ison0oxX | 4 410 £90000 12 credit allow by supplier 1200000 lgoooo y_ 2 40 [2 cash Balane 20000 (26 4SO00 Curren} Liabilities 1) Credit allow b lier 4 87500 porkin jkal (A-B) = 9) 57500 —Factoring — Business entity sells Ala discount in order e to rach point Tj mek means nol a sel) biT4s sell of tmbolee of the business TH eto financial Service desi +0 help compawes mm: i acclevable in bet way factoring done as per Savin “ sD pasties \nvalves Tn faotoring 4) Factor i) chend 11)_customer Faclow Means +he Financial intermediatoned- oF | debtors Client ~ s@He: Seller of recitevable ov debtoxt that means _1S+ patty and ch TOES: make paumend +o {he owners of invaice Advantages : Reduce o perating cycle + Credii rick fis +tians ferred . hd