Financial Management Assignment - Working Capital Management

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Reference no: EM132395541

Financial Management Assignment - Working Capital Management

Practical Questions based on Operating Cycle:

Q1. From the following data, calculate cash conversion cycle:

Average raw materials period	90 days
Average Work-in-progress period	15 days
Average period of holding finished goods	30 days
Average collection period of accounts receivables	50 days
Average period of credit received from suppliers	25 days

Q2. Shankar & Co. is engaged in manufacturing toys. Following data of the company is made available:

Opening Stock	Rs. 4,000
Average stock	Rs. 10,000
Cost of sales	Rs. 80,000
Total Purchases	Rs.2,50,000
Credit Purchases	Rs.2,00,000
Creditors' holding	40 days
Opening creditors	3,000
Debtors' holding	45 days
Opening debtors	5,000
Cash sales	50,000
Total sales	1,80,000

Calculate operating cycle and number of operating cycles in a year. Also find out the missing figures-closing stock, closing debtors and closing creditors.

Q3. Anisha Ltd. is engaged in manufacturing ready-made garments. The following data relates to garments industry:

	Days
Raw materials holding period	30
Credit provided by suppliers	-10
Work-in-process holding period	8
Finished goods holding period	30
Debtors' collection period	30
	88 days

Using the following data, calculate working capital cycle.

Opening stock- Raw materials	200
Total purchases-Raw materials	3,000
Cash purchases-Raw materials	500
Closing Stock-Raw materials	100
Average work-in-progress	70
Average finished goods stock	90
Average debtors	200
Average creditors	120
Total sales	5,000
Cash sales	800
Cost of sales	3,200

(Note: cost of sales is also the cost of production, in the absence of selling and administrative costs.)

Q4. Dimpy Ltd. has obtained the following data concerning the average working capital cycle for other companies in the same industry:

Raw material holding period	20 days
Credit received	-40 days
Work-in-progress holding period	15 days
Finished goods stock holding period	40 days
Debtors' collection period	60 days
	95 days

Using the following data, calculate the current working capital cycle for Dimpy Ltd.

	(Rs. in thousands)
Credit sales	5,000
Total cost of sales	4,000
Cost of production	3,000
Purchases	3,500
Total raw materials consumed	600
Average raw material stock	80
Average work-in-progress	85
Average finished goods stock	180
Average creditors	700
Average debtors	350

Reference no: EM132395541

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