Estimation of Working Capital Requirements using RatiosCompute Working Capital Requirements of a Company from the following information:60 days SalesAverage Collection PeriodAverage Payment Period75 days Gross ProfitInventory Holding Period (on the90 days Credit Purchasesbasis of Cost of Goods Sold)Cash & Bank Balances2.5% of Sales 1 YearThe Company expects 50% Sales increment during the next year.€20,00,00025%1/3 of Cost ofGoods Sold360 days

In financial speak, working capital is the difference between current assets and current…

Estimation of Working Capital Requirements using Ratios Compute Working Capital Requirements of a Company from the following information: 60 days Sales 75 days Gross Profit 90 days Credit Purchases Average Collection Period Average Payment Period Inventory Holding Period (on the basis of Cost of Goods Sold) Cash & Bank Balances 2.5% of Sales 1 Year The Company expects 50% Sales increment during the next year. €20,00,000 25% 1/3 of Cost of Goods Sold 360 days

Estimation of Working Capital Requirements using Ratios Compute Working Capital Requirements of a Company from the following information: 60 days Sales 75 days Gross Profit 90 days Credit Purchases Average Collection Period Average Payment Period Inventory Holding Period (on the basis of Cost of Goods Sold) Cash & Bank Balances 2.5% of Sales 1 Year The Company expects 50% Sales increment during the next year. €20,00,000 25% 1/3 of Cost of Goods Sold 360 days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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