Calculate average working capital requirement

Reference no: EM13181836

GX Ltd is about to commence a new business for which you are asked to calculate its average Working Capital Requirement for the first year with the help of the following information:

	Average Credit Period	Estimated Amount for 1st year (Rs.)
Purchase of Raw Materials	6 weeks	26,00,000
Wages	1.5 weeks	19,50,000
Overheads:
Rent & rates	6 months	1,00,000
Salaries to staff	1 months	3,60,000
Insurance	3 months	2,00,000
Selling expenses	2 weeks	4,55,000
Other Overheads	2 months	6,00,000
Sales:
Cash	-	1,40,000
Credit	7 weeks	65,00,000
Average amount of stock & WIP	-	3,00,000
Average amount of undrawn profit	-	3,10,000

Sales are made at an even rate for the year. An overdraft limit of Rs. 1,50,000 has been arranged with the banker.

Reference no: EM13181836

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