prepare Statement of Estimated Working capital for next 2 years and indicate at least 2 appropriate urces for working capital funding.
ABC Limited is in the process of evaluating a project to launch a new category of products at the existing manufacturing facility. There will not be any significant level of Capital investment however, the
1.Sales for the first year is estimated at INR 250 crores and expected to grow at the rate of 20% every year.
2. 90% of the sales is expected to be in Credit
3.Receivables are expected to be at 45 days of sales
4.The purchases are expected to be as follows: a)Raw Materials 40% of the sales
b)Other consumables at 20% of sales
5.The credit period enjoyed by the entity for raw materials is 30 day and other consumables are 45 days
6.Finished goods inventory is expected to be valued at 80% of the sales price and period of storage is expected to be 45 days. Raw Materials and Other consumables are expected to be for 30 days.
7.Insurance for stock is prepaid @2% of the value of RM, Other consumables and Finished Goods
8.Other payables are expected to be constant at Rs 1 crores
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