You are required to prepare a statement showing the working capital needed to finance
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
![00:35 1 @ O
<Untitled>
Problem 5
A proforma cost sheet of a company provides the following particulars:
Elements of Cost
Amt. Per Unit (Rs.)
Raw Materials
140
Direct Labours
60
Overheads
70
270
Total Cost
Profit
Selling Price
Further particulars available are:
30
300
Raw materials are in stock on an average for one month. Materials are in process on an
average for half a month. Finished goods are in stock on an average for one month.
Credit allowed by suppliers is one month - credit allowed to customers is two months. Lag in
payment of wages is 1.5 weeks. Lag in payment of overhead expenses is one month. One
fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs.
50,000.
You are required to prepare a statement showing the working capital needed to finance, a
level of activity of 2,40,000 units of production. You may assume that production is carried
on evenly throughout the year, wages and overhead accrue similarly and a time period of 4
weeks is equivalent to a month.
Note: Year - 4x12- 48 weeks
自
A
Note
OCR
Share
More
II](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F421a7542-d1ce-459f-bcc0-7265447b290c%2F988a0053-d20f-4544-adc0-4fac05864579%2F58m5cmj_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 2 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)