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Calculate the working capital from a lending bank

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Reference no: EM132531341

The following is the Balance Sheet of Gallant (Pty) Ltd. (Rand in thousands)

Liabilities                                                    Assets

Share Capital - 20 000                   Fixed Assets 25 000

Retained Earnings 12 000                 Investments 7 000

Long-term Loan 0                             Stock 15 000

Trade Creditors 23 000                       Debtors and Others 25 000

Overdraft 24 000                             Other Debtors 3 000

Accruals and others 1 000                          Cash 5 000

Total 80 000                                            Total 80 000

You have been informed that the bank has extended an overdraft facility of R50million only, of which R24million is currently utilized. No other facility is enjoyed from any other bank.

Question (a) Calculate the following and explain your views:

i) The working capital requirement, from the finance manager's point of view

ii) The working capital, from a lending bank's perspective

Reference no: EM132531341

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