{"id":5601,"date":"2024-03-01T16:03:34","date_gmt":"2024-03-01T10:33:34","guid":{"rendered":"https:\/\/gstguntur.com\/?p=5601"},"modified":"2024-03-05T14:44:31","modified_gmt":"2024-03-05T09:14:31","slug":"working-capital-management-financial-and-strategic-management-mcq","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/working-capital-management-financial-and-strategic-management-mcq\/","title":{"rendered":"Working Capital Management \u2013 Financial and Strategic Management MCQ"},"content":{"rendered":"

Students should practice Working Capital Management \u2013 CS Executive Financial and Strategic Management MCQ<\/a> Questions with Answers based on the latest syllabus.<\/p>\n

Working Capital Management \u2013 Financial and Strategic Management MCQ<\/h2>\n

Question 1.
\nWorking capital is also known as___
\n(A) Operation capital
\n(B) Operating capital
\n(C) Current assets capital
\n(D) Capital relating to main projects of the company
\nAnswer:
\n(B) Operating capital<\/p>\n

Question 2.
\nPositive working capital means that __
\n(A) The company is able to pay off its long-term liabilities.
\n(B) The company is able to select profitable projects.
\n(C) The company is unable to meet its short-term liabilities.
\n(D) The company is able to pay off its short-term liabilities.
\nAnswer:
\n(D) The company is able to pay off its short-term liabilities.<\/p>\n

Question 3.
\nWorking capital =
\n(A) Core current assets less current liabilities
\n(B) Core current assets less core current liabilities
\n(C) Liquid assets less current liabilities
\n(D) Current assets less current liabilities
\nAnswer:
\n(D) Current assets less current liabilities<\/p>\n

Question 4.
\nOther things remaining constant, if the debtors increase as compared to last year it means –
\n(A) Company has a poor credit policy
\n(B) Company has a positive working capital
\n(C) Company has a negative working capital
\n(D) Company has no working capital
\nAnswer:
\n(B) Company has a positive working capital<\/p>\n

Question 5.
\nWhich of the following will be considered while calculating working capital?
\n(1) Short Term Advances
\n(2) Stock of WIP
\n(3) Short Term Investments
\n(4) Perpetual inventory policy
\nSelect the correct answer from the options given below.
\n(A) (2) & (3)
\n(B) (1) & (3)
\n(C) (1),(2)&(3)
\n(D) All of the above except (4)
\nAnswer:
\n(D) All of the above except (4)<\/p>\n

Question 6.
\nContingencies are –
\n(A) Added to gross working capital
\n(B) Deducted from gross working capital
\n(C) Contingencies are not considered in financial management; it is considered in accounts only
\n(D) None of the above
\nAnswer:
\n(A) Added to gross working capital<\/p>\n

Question 7.
\nFor reducing and controlling working capital requirement which of the following step is required to be taken –
\n(A) Increase in manufacturing cycle
\n(B) Increase of credit period allowed by creditors to the extent that does not affect the production.
\n(C) Increase in credit period given to customers
\n(D) All of the above
\nAnswer:
\n(B) Increase of credit period allowed by creditors to the extent that does not affect the production.<\/p>\n

Question 8.
\nWorking capital is a highly effective barometer of a company\u2019s efficiency and effectiveness.
\n(A) Operational and servicing
\n(B) Longterm
\n(C) Operational and financial
\n(D) Positive and negative
\nAnswer:
\n(C) Operational and financial<\/p>\n

Question 9.
\nStatement I:
\nMaintaining adequate working capital is not just important in the short term. Sufficient liquidity must be maintained in order to ensure the survival of the business in the long term as well.
\nStatement II:
\nEven a profitable business may fail if it does not have the adequate cash flow to meet its liabilities as they fall due.
\nSelect the correct answer from the options given below.
\n(A) Statement I is correct while Statement II is incorrect.
\n(B) Statement II is correct while Statement I is incorrect.
\n(C) Both Statement I and Statement II Eire correct.
\n(D) Both Statement I and Statement II are incorrect.
\nAnswer:
\n(C) Both Statement I and Statement II Eire correct.<\/p>\n

Question 10.
\nWhile calculating working capital based on cash cost –
\n(A) Depreciation is ignored
\n(B) Non-cash items are not considered
\n(C) Debtors are calculated on the basis of the cost of goods sold and not on sale price
\n(D) All of the above
\nAnswer:
\n(D) All of the above<\/p>\n

Question 11.
\nNegative working capital means that –
\n(A) The company has no current assets at all
\n(B) The company currently is unable to meet its short-term liabilities
\n(C) The company has negative earnings before interest and tax
\n(D) The company currently is able to meet its short-term liabilities
\nAnswer:
\n(B) The company currently is unable to meet its short-term liabilities<\/p>\n

Question 12.
\nWhich of the following analyzes the accounts receivable, inventory, and accounts payable cycles in terms of a number of days?
\n(A) Operation cycle
\n(B) Current asset cycle
\n(C) Operating cycle
\n(D) Business cycle
\nAnswer:
\n(C) Operating cycle<\/p>\n

Question 13.
\nWhich of the following method is not used for calculating the working capital cycle?
\n(A) Percentage of sales method
\n(B) Regression analysis method
\n(C) Operating cycle approach
\n(D) Trial and error method
\nAnswer:
\n(D) Trial and error method<\/p>\n

Question 14.
\nWhich of the following is the correct formula to calculate WIP Conversion Period?
\n\"Working
\n\"Working
\nAnswer:
\n(C)<\/p>\n

Question 15.
\nInitial Working Capital
\n(A) Supplies the funds necessary to meet the current working expenses.
\n(B) Is used to raise the volume of production by improvement or extension of machinery.
\n(C) Is required at the time of the commencement of business
\n(D) Represents the amount utilized at the time of contingencies.
\nAnswer:
\n(C) Is required at the time of the commencement of business<\/p>\n

Question 16.
\nWhich of the following is determinant of working capital?
\n(1) Nature and size of business
\n(2) Manufacturing cycle
\n(3) Credit policy
\n(4) Production policy
\nSelect the correct answer from the options given below.
\n(A) (1) only
\n(B) (1) and (2) only
\n(C) (1), (2), and (3) only
\n(D) (1), (2), (3), and (4)
\nAnswer:
\n(D) (1), (2), (3) and (4)<\/p>\n

Question 17.
\nWhich of the following statement is correct?
\n(A) A desire to maintain an established dividend policy may affect the volume of working capital.
\n(B) Changes in working capital may bring about an adjustment of dividend policy.
\n(C) Payment of dividend may reduce cash in current assets consider-ably which in turn may reduce the available working capital for the company.
\n(D) All of the above
\nAnswer:
\n(D) All of the above<\/p>\n

Question 18.
\nRegular Working Capital:
\n(A) Supplies the funds necessary to meet the current working expenses le. for purchasing raw material and supplies, payment of wages, salaries, and other sundry expenses.
\n(B) Refers to the firm\u2019s investment in current assets.
\n(C) Is amount over and above the per\u00acmanent level of working capital
\n(D) Refers to the difference between current asset and Current liabilities
\nAnswer:
\n(A) Supplies the funds necessary to meet the current working expenses le. for purchasing raw material and supplies, payment of wages, salaries, and other sundry expenses.<\/p>\n

Question 19.
\nWhich of the following is the correct formula to calculate working capital leverage?
\n\"Working
\nAnswer:
\n(D)<\/p>\n

Question 20.
\nOne of the important objective(s) of working capital management is\/are –
\n(A) To maintain the optimum levels of investment in current assets.
\n(B) To reduce the levels of current liabilities
\n(C) Improve the return on capital employed
\n(D) All of the above
\nAnswer:
\n(D) All of the above<\/p>\n

Question 21.
\nFluctuating Working Capital is also called as –
\n(A) Reserve Margin Working Capital
\n(B) Temporary Working Capital
\n(C) Permanent Working Capital
\n(D) Variable working capital
\nAnswer:
\n(D) Variable working capital<\/p>\n

Question 22.
\nOperating cycle is also called as –
\n(A) Working cycle
\n(B) Business cycle
\n(C) Current asset cycle
\n(D) Working capital cycle
\nAnswer:
\n(D) Working capital cycle<\/p>\n

Question 23.
\nFor reducing and controlling working capital requirement which of the following step is required to be taken –
\n(I) Reduction of the manufacturing cycle.
\n(II) Increase of credit period allowed by creditors to the extent that does not affect the production.
\n(Ill) Reduction in credit period given to customers.
\nSelect the correct answer from the options given below.
\n(A) (I) &(III)
\n(B) (II) & (III)
\n(C) (I) & (II)
\n(D) All of the above
\nAnswer:
\n(D) All of the above<\/p>\n

Question 24.
\nThe capital which is needed to meet the seasonal requirements of the business –
\n(A) Gross Working Capital
\n(B) Reserve Margin Working Capital
\n(C) Net working capital
\n(D) Fluctuating Working Capital
\nAnswer:
\n(D) Fluctuating Working Capital<\/p>\n

Question 25.
\nA higher current assets\/fixed assets ratio indicates –
\n(A) Hedging Approach
\n(B) Conservative Approach
\n(C) Matching\/hedging Approach
\n(D) Aggressive Approach
\nAnswer:
\n(B) Conservative Approach<\/p>\n

Question 26.
\nThe aggressive approach covers those policies –
\n(A) Where the firm relies heavily on short term bank finance
\n(B) Seeks to increase dependence on long-term financing.
\n(C) Both (A) and (B)
\n(D) Neither (A) nor (B)
\nAnswer:
\n(A) Where the firm relies heavily on short term bank finance<\/p>\n

Question 27.
\nGross working capital refers to –
\n(A) The amount utilized at the time of contingencies.
\n(B) The firm\u2019s investment in current assets.
\n(C) The capital which is required at the time of the commencement of business.
\n(D) The working capital which is necessary on a continuous and uninterrupted basis.
\nAnswer:
\n(B) The firm\u2019s investment in current assets.<\/p>\n

Question 28.
\nA conservative policy implies –
\n(A) Greater liquidity and lower risk
\n(B) Greater risk and lower liquidity
\n(C) Negligible risk
\n(D) No risk at all with low liquidity
\nAnswer:
\n(A) Greater liquidity and lower risk<\/p>\n

Question 29.
\nIf a firm has insufficient working capital and tries to increase sales, it can easily over-stretch the financial resources of the business. This is called –
\n(A) Over rating
\n(B) Overtrading
\n(C) Overcoming
\n(D) Overtone
\nAnswer:
\n(B) Overtrading<\/p>\n

Question 30.
\nWhich of the following represents the amount utilized at the time of contingencies?
\n(A) Reserve Working Capital
\n(B) Net working capital
\n(C) Extra working capital
\n(D) Fixed working capital
\nAnswer:
\n(A) Reserve Working Capital<\/p>\n

Question 31.
\nPermanent Working Capital is also known as –
\n(A) Fixed working capital
\n(B) Temporary working capital
\n(C) Long term funds
\n(D) Gross margin working capital
\nAnswer:
\n(A) Fixed working capital<\/p>\n

Question 32.
\nA lower current assets\/fixed assets ratio means –
\n(A) Matching\/hedging Approach
\n(B) Aggressive current assets policy
\n(C) Riskier current assets policy
\n(D) Conservative current assets pol-icy
\nAnswer:
\n(B) Aggressive current assets policy<\/p>\n

Question 33.
\nAny amount over and above the permanent level of working capital is known as working capital.
\n(A) Temporary
\n(B) Fluctuating
\n(C) Variable
\n(D) All of the above
\nAnswer:
\n(D) All of the above<\/p>\n

Question 34.
\nCurrent assets are those assets –
\n(A) Which can be sold by the companies.
\n(B) Which are less important from a production angle.
\n(C) Which are held by the companies to pay off current liabilities.
\n(D) Which are converted into cash within a period of one year.
\nAnswer:
\n(D) Which are converted into cash within a period of one year.<\/p>\n

Question 35.
\nCurrent assets are usually financed through –
\n(A) equity capital, preference capital, debentures, bonds, and long-term bank loans.
\n(B) (A) and (C)
\n(C) mode of the overdraft, cash credit, public deposits, etc.
\n(D) money market instrument and long-term securities.
\nAnswer:
\n(C) mode of the overdraft, cash credit, public deposits, etc.<\/p>\n

Question 36.
\nTo carry on a business, a certain minimum level of working capital is necessary on a continuous and uninterrupted basis. This requirement is referred to as –
\n(A) Permanent working capital
\n(B) Long term working capital
\n(C) Fixed working capital
\n(D) Both (A) and (C)
\nAnswer:
\n(D) Both (A) and (C)<\/p>\n

Question 37.
\nWhich of the following is\/are methods of maximum permissible bank finance as recommended by the Tandon Committee?
\n(A) 75% of (Current Assets – Current Liabilities)
\n(B) 50% of (Current Assets – Current Liabilities)
\n(C) 75% of (Core Current Assets – Current Liabilities)
\n(D) 50% of (Core Current Assets – Current Liabilities)
\nAnswer:
\n(A) 75% of (Current Assets – Current Liabilities)<\/p>\n

Question 38.
\n_____varies inversely with profitability.
\n(A) Liquidity
\n(B) Risk
\n(C) Gross profit
\n(D) None of the above
\nAnswer:
\n(A) Liquidity<\/p>\n

Question 39.
\n____refers to the difference between current asset and current liabilities.
\n(A) Differential working capital
\n(B) Net working capital
\n(C) Operation working capital
\n(D) None of the above
\nAnswer:
\n(B) Net working capital<\/p>\n

Question 40.
\nPermanent working capital –
\n(A) Varies with seasonal needs.
\n(B) Includes fixed assets.
\n(C) Is the number of current assets required to meet a firm\u2019s long-term minimum needs.
\n(D) Includes accounts payable.
\nAnswer:
\n(C) Is the number of current assets required to meet a firm\u2019s long-term minimum needs.<\/p>\n

Question 41.
\nFinancing a long-lived asset with short-term financing would be
\n(A) an example of \u201cmoderate risk – moderate (potential) profitability” asset financing.
\n(B) an example of \u201clow risk – low (potential) profitability\u201d asset financing.
\n(C) an example of “high risk – high (potential) profitability\u201d asset financing.
\n(D) an example of the \u201chedging approach\u201d to financing.
\nAnswer:
\n(C) an example of “high risk – high (potential) profitability\u201d asset financing.<\/p>\n

Question 42.
\nHardcore working capital is also known as –
\n(A) Hard current assets
\n(B) Core current assets
\n(C) Core current liabilities
\n(D) Hard current liabilities
\nAnswer:
\n(B) Core current assets<\/p>\n

Question 43.
\nAn aggressive policy indicates –
\n(A) Higher liquidity and poor-risk
\n(B) Higher risk and poor liquidity
\n(C) Higher risk and higher liquidity
\n(D) Lower risk with lower liquidity
\nAnswer:
\n(B) Higher risk and poor liquidity<\/p>\n

Question 44.
\nTandon Committee Report on Working Capital relates to norms for
\n(A) Inventory and receivables bank finance as recommended by the Tandon Committee?
\n(B) Gross profit and inventory
\n(C) Receivable, gross profit, and inventory
\n(D) Net profit and receivables
\nAnswer:
\n(A) Inventory and receivables bank finance as recommended by the Tandon Committee?<\/p>\n

Question 45.
\nIn deciding the appropriate level of current assets for the firm, management is confronted with –
\n(A) Trade-off between profitability and risk.
\n(B) Trade-off between liquidity and marketability.
\n(C) Trade-off between equity and debt.
\n(D) Trade-off between short-term versus long-term borrowing.
\nAnswer:
\n(A) Trade-off between profitability and risk.<\/p>\n

Question 46.
\nWhich of the following is not correct with the matching strategy?
\n(A) All assets should be financed with permanent long-term capital.
\n(B) Temporary current assets should be financed with temporary working capital.
\n(C) Long-term assets should be Financed from long-term capital.
\n(D) Permanent current assets should be financed with permanent working capital.
\nAnswer:
\n(A) All assets should be financed with permanent long-term capital.<\/p>\n

Question 47.
\nThe paucity of working capital may lead to a situation where –
\n(A) The firm may not be able to its long term finance
\n(B) The firm may not be able to meet its liabilities
\n(C) The firm may not be able to achieve its sale target
\n(D) The firm may take on some different projects with a low internal rate of return.
\nAnswer:
\n(B) The firm may not be able to meet its liabilities<\/p>\n

Question 48.
\nWhich of the following is\/are method of maximum permissible
\n(A) [50% of (Current Assets – Core Current Assets)] – Current Liabilities
\n(B) [7596 of (Core Current Assets – Current Assets)] – Current Liabilities
\n(C) [7596 of (Current Assets – Core Current Assets)] – Current Liabilities
\n(D) [8096 of (Current Assets – Core Current Assets)] – Current Liabilities
\nAnswer:
\n(C) [7596 of (Current Assets – Core Current Assets)] – Current Liabilities<\/p>\n

Question 49.
\nWhat is the difference between the current ratio and the quick ratio?
\n(A) The current ratio includes inventory and the quick ratio does not.
\n(B) The current ratio does not include inventory and the quick ratio does.
\n(C) The current ratio includes physical capital and the quick ratio does not.
\n(D) The current ratio does not include physical capital and the quick ratio does.
\nAnswer:
\n(A) The current ratio includes inventory and the quick ratio does not.<\/p>\n

Question 50.
\nIt is understood that a current ratio of _____ for a manufacturing firm implies that the firm has an optimum amount of working capital.
\n(A) 1 (one)
\n(B) 2 (two)
\n(C) 3 (three)
\n(D) 2.5 (two and half)
\nAnswer:
\n(B) 2 (two)<\/p>\n

Question 51.
\nIf raw material consumed is \u20b9 8,42,000; cost of production is \u20b9 14,25,000; Stock of raw material & WIP is \u20b9 1,24,000 and \u20b9 72,000 respectively then Raw Material Conversion period will be –
\nNote: 1 Year = 365 days
\n(A) 54 days
\n(B) 18 days
\n(C) 29 days
\n(D) 49 days
\nHint:
\nRaw material conversion period:
\n\\(\\frac{\\text { Raw Material Stock }}{\\text { Raw Material Consumed }}\\) \u00d7 365 = \\(\\frac{1,24,000}{8,42,000}\\) \u00d7 365 = 54 days
\nAnswer:
\n(A) 54 days<\/p>\n

Question 52.
\nCalculate the working capital from the following data:<\/p>\n\n\n\n\n\n\n\n\n\n\n
Particulars<\/strong><\/td>\n\u20b9<\/strong><\/td>\n<\/tr>\n
Raw Material Stock<\/td>\n11,70,000<\/td>\n<\/tr>\n
WIP Stock<\/td>\n9,58,750<\/td>\n<\/tr>\n
Finished Goods Stock<\/td>\n26,65,000<\/td>\n<\/tr>\n
Debtors<\/td>\n55,12,000<\/td>\n<\/tr>\n
Cash & Bank<\/td>\n6,00,000<\/td>\n<\/tr>\n
Creditors<\/td>\n17,55,000<\/td>\n<\/tr>\n
Outstanding expenses<\/td>\n14,95,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(A) 76,75,550
\n(B) 76,55,750
\n(C) 75,65,750
\n(D) 77,55,650
\nHint:
\nWorking capital = 11,70,000 + 9,58,750 + 26,65,000 + 55,12,000 + 6,00,000 – 17,55,000 – 14,95,000 = 76,55,750
\nAnswer:
\n(B) 76,55,750<\/p>\n

Question 53.
\nAnnual credit sales = \u20b9 19,50,000
\nCash sales = \u20b9 11,50,000
\nDebtors = \u20b9 1,60,000
\nBills receivable = \u20b9 1,00,000
\nFinished goods = \u20b9 11,22,000
\nCollection Period = \u20b9
\nNote: 1 Year = 360 days
\n(A) 29 days
\n(B) 30 days
\n(C) 48 days
\n(D) Data given is not sufficient
\nHint:
\nDebtors Collection Period:
\n\\(\\frac{\\text { Debtors }}{\\text { Annual Credit Sales }}\\) \u00d7 360 = \\(\\frac{2,60,000}{19,50,000}\\) \u00d7 360 = 48 days
\nAnswer:
\n(C) 48 days<\/p>\n

Question 54.
\nFinancial statement of A Ltd. shows the following data:
\nOpening stock \u20b9 1,75,000, Total purchase \u20b9 10,75,000 including cash purchase \u20b9 1,75,000, total sales \u20b9 15,00,000 out of which 2096 are on cash basis. Closing stock is \u20b9 1,50,000. Stock turnover ratio =?
\n(A) 7.67
\n(B) 6.77
\n(C) 7.76
\n(D) 7.66
\nHint:
\nStock turnover ratio:
\n\\(\\frac{\\text { Material Consumed }}{\\text { Average Stock }}=\\frac{11,00,000}{1,62,500}\\) = 6.77
\nAnswer:
\n(B) 6.77<\/p>\n

Question 55.
\nWIP Conversion Period = 18 days
\nRaw Material Consumed = \u20b9 8,42,000
\nStock of WIP = \u20b9 72,000
\nCost of Production = ?
\n(A) \u20b9 14,00,000
\n(B) \u20b9 22,67,000
\n(C) \u20b9 5,83,000
\n(D) \u20b9 14,60,000
\nHint:
\nWIP Conversion Period:
\n\\(\\frac{\\text { Average Stock of WIP }}{\\text { Annual Cost of Production }}\\) \u00d7 360 days
\n18 = \\(\\frac{72,000}{x}\\) \u00d7 365 days
\nx = Annual Cost of Production = 14,60,000
\nAnswer:
\n(D) \u20b9 14,60,000<\/p>\n

Question 56.
\nA Ltd. financial statement shows the following data:
\nEquity \u20b9 5,67,500, Reserve & surplus \u20b9 3,87,850, total debt \u20b9 5,88,778 out of which \u20b9 2,88,778 are long term debt, fixed assets are \u20b9 11,44,128.
\nCurrent Ratio =?
\n(A) 2.48
\n(B) 1.92
\n(C) 3.68
\n(D) 1.33
\nHint:
\nCurrent liabilities = 5,88,778 – 2,88,778 = 3,00,000
\nTotal assets = 5,67,500 + 3,87,850 + 5,88,778 = 15,44,128
\nCurrent assets = 15,44,128 – 11,44,128 = 4,00,000
\nCurrent ratio = \\(\\frac{4,00,000}{3,00,000}\\) = 1.33
\nAnswer:
\n(D) 1.33<\/p>\n

Question 57.
\nTotal sales of OLX Ltd. are \u20b9 31,248 out of which 2596 are cash sales. The closing balance of debtors is \u20b9 9,468. Debtors collection period =?
\nNote: 1 Year = 365 days
\n(A) 4.2 months
\n(B) 157 days
\n(C) 148 days
\n(D) 4.43 months
\nHint:
\n\"Working
\nAnswer:
\n(C) 148 days<\/p>\n

Question 58.
\nRaw material consumption = \u20b9 6,48,000
\nRaw material purchase = \u20b9 8,42,000
\nAnnual cost of production = \u20b9 14,42,000
\nCreditors = \u20b9 75,000
\nBills payable = \u20b9 25,000
\nCreditors Payment Period = ?
\nNote: 1 Year = 360 days
\n(A) 34 days
\n(B) 43 days
\n(C) 40 days
\n(D) 39 days
\nHint:
\nCreditors Payment Period:
\n\\(\\frac{\\text { Accounts Payable }}{\\text { Annual credit purchase }}\\) \u00d7 365 days = \\(\\frac{1,00,000}{8,42,000}\\) \u00d7 365 days = 43 days
\nAnswer:
\n(B) 43 days<\/p>\n

Question 59.
\nThe following information is available for your calculation.
\nLevel of activity = 1,56,000 units
\n\"Working
\nRaw materials are in stock on average for two months and Materials are in process, on average half a month.
\nCalculate the value of \u2018Raw Material Stock\u2019 for working capital purposes.
\n(A) \u20b9 26,65,000
\n(B) \u20b9 23,40,000
\n(C) \u20b9 6,45,250
\n(D) \u20b9 9,58,750
\nHint:
\nRaw Material Stock (1,40,40,000 \u00d7 \\(\\frac{2}{12}\\)) = 23,40,000
\nAnswer:
\n(B) \u20b9 23,40,000<\/p>\n

Question 60.
\nFrom the following data calculate the finished goods conversion period for the years 2019 & 2020.
\n\"Working
\nNote: 1 Year = 360 days
\n(A) 29 days & 39 days
\n(B) 39 days & 29 days
\n(C) 25 days & 35 days
\n(D) 35 days & 25 days
\nHint:
\nFinished Goods Conversion Period:
\n\\(\\frac{\\text { Stock of Finished Goods }}{\\text { Annual Cost of Goods Sold }}\\) \u00d7 360 days
\n\"Working
\nAnswer:
\n(A) 29 days & 39 days<\/p>\n

Question 61.
\nMaximum permissible bank finance as per the first method of Tandon Committee norms was \u20b9 57,41,813 while current liabilities are reported at \u20b9 32,50,000. Current assets =?
\n(A) \u20b9 1,09,05,750
\n(B) \u20b9 81\/79,313
\n(C) \u20b9 1,09,07,550
\n(D) \u20b9 1,05,09,750
\nHint:
\nMaximum permissible bank finance as per first method = 75% of (Current Assets – Current Liabilities)
\n57,41,813 = 0.75 \u00d7 (x – 32,50,000)
\n57,41,813 = 0.75 – 24,37,500
\n0.75 = 81,79,313
\nx= Current Assets = 1,09,05,750
\nAnswer:
\n(A) \u20b9 1,09,05,750<\/p>\n

Question 62.
\nCurrent assets of Z Ltd. are \u20b9 3,70,000 which includes stock \u20b9 1,00,000 and prepaid expense \u20b9 70,000. Its current liability are \u20b9 1,60,000 which includes provision for tax \u20b9 60,000.
\nLiquid Ratio =?
\n(A) 1.25
\n(B) 1.52
\n(C) 1.22
\n(D) 0.95
\nHint:
\nLiquid ratio = \\(\\frac{\\text { Liquid Assets }}{\\text { Current Liabilities }}=\\frac{2,00,000}{1,60,000}\\) = 1.25
\nAnswer:
\n(A) 1.25<\/p>\n

Question 63.
\nThe following information is provided by DPS Ltd. for the year ending 31st March 2019.
\nRaw material storage period 55 days WIP conversion period 18 days
\nFinished goods storage 22days period
\nDebt collection period 45 days
\nCreditor\u2019s payment period 60 days
\nAnnual operating cost including depreciation of \u20b9 2,10,000 was \u20b9 21,00,000.
\n[1 Year = 360 days]
\nYou are required to calculate working capital on a cash cost basis.
\n(A) \u20b9 4,20,000
\n(B) \u20b9 4,66,667
\n(C) \u20b9 7,35,000
\n(D) \u20b9 8,16,667
\nHint:
\nOperating Cycle Period = 55 + 18 +22 +45 – 60 80 days
\nWorking Captial = \\(\\frac{\\text { Operating Cost }}{360 \\text { days }}\\) \u00d7 Operating Cycle days
\n= \\(\\frac{18,90,000}{360 \\text { days }}\\) \u00d7 80 days
\n= 4,20,000
\nAnswer:
\n(A) \u20b9 4,20,000<\/p>\n

Question 64.
\nKT Ltd.’s opening stock was \u20b9 2,50,000 and the closing stock was \u20b9 3,75,000. Sales during the year were \u20b9 13,00,000 and the gross profit ratio was 25% on sales. Average accounts payable are \u20b9 80,000. Creditors Turnover Ratio =?
\n(A) 13.75
\n(B) 14.33
\n(C) 13.33
\n(D) 14.44
\nHint:<\/p>\n\n\n\n\n\n
Sales<\/td>\n13,00,000<\/td>\n<\/tr>\n
(-) Gross profit<\/td>\n(3,25,000)<\/td>\n<\/tr>\n
Cost of goods sold<\/td>\n9,75,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

2,50,000 + Cost of production\/purchase – 3,75,000 = 9,75,000
\nCost of production\/purchase = 11,00,000
\nCreditors Turnover Ratio = \\(\\frac{11,00,000}{80,000}\\) =13.75
\nAnswer:
\n(A) 13.75<\/p>\n

Question 65.
\nThe raw material conversion period is 36 days. Raw material consumed and cost of goods sold in the year is \u20b9 1,80,000 & \u20b9 2,16,000 respectively. How much raw material stock will appear in the working capital statement?
\nNote: 1 Year = 360 days
\n(A) \u20b9 18,000
\n(B) \u20b9 20,000
\n(C) \u20b9 21,600
\n(D) \u20b9 19,800
\nHint:
\nRaw material conversion period:
\n\\(\\frac{\\text { Raw Material Stock }}{\\text { Raw Material Consumed }}\\) \u00d7 360
\n36 = \\(\\frac{x}{1,80,000}\\) \u00d7 360
\nx = Raw Material Stock = 18,000
\nAnswer:
\n(A) \u20b9 18,000<\/p>\n

Question 66.
\nCreditors payment period = 60 days
\nMaterial consumed = \u20b9 1,20,000
\nMaterial purchased in cash = \u20b9 10,000
\nMaterial purchased on = \u20b9 90,000 credit
\nCreditors that will appear in balance sheet and working capital statement = ?
\nNote: 1 Year = 360 days
\n(A) \u20b9 16,667
\n(B) \u20b9 15,000
\n(C) \u20b9 20,000
\n(D) \u20b9 36,667
\nHint:
\nCreditors payment period = \\(\\frac{\\text { Creditors }}{\\text { Credit purchase }}\\) \u00d7 360
\n60 = \\(\\frac{\\text { Creditors }}{90,000}\\) \u00d7 360
\nCreditors = 15,000
\nAnswer:
\n(B) \u20b9 15,000<\/p>\n

Question 67.
\nOpening and closing balance of creditors are \u20b9 2,00,000 & \u20b9 2,40,000 respectively. Raw material purchased on credit was \u20b9 11,00,000. Creditors payment period for the purpose of the working capital statement will be –
\n[l Year =360 days]
\n(A) 72 days
\n(B) 32 days
\n(C) 65 days
\n(D) 78 days
\nHint:
\nCreditors payment period = \\(\\frac{\\text { Average Creditors }}{\\text { Credit purchase }}\\) \u00d7 360
\n= \\(\\frac{2,20,000}{11,00,000}\\) \u00d7 360
\n= 72 days
\nAnswer:
\n(A) 72 days<\/p>\n

Question 68.
\nN Ltd. gives the following information:
\nCurrent Ratio 2.8
\nTotal assets \u20b9 60,00,000
\nFixed assets \u20b9 32,00,000
\nCurrent liabilities =?
\n(A) \u20b9 28,00,000
\n(B) \u20b9 10,00,000
\n(C) \u20b9 18,00,000
\n(D) \u20b9 12,00,000
\nHint:
\nCurrent assets = 60,00,000 – 32,00,000 = 28,00,000
\n2.8 = \\(\\frac{28,00,000}{x}\\)
\nx = Current liabilities = 10,00,000
\nAnswer:
\n(B) \u20b9 10,00,000<\/p>\n

Question 69.
\nN Ltd. gives the following information:
\nLiquid ratio 1.6
\nCurrent Assets \u20b9 28,00,000
\nCurrent Liabilities \u20b9 10,00,000
\nStock = ? .
\n(A) \u20b9 28,00,000
\n(B) \u20b9 10,00,000
\n(C) \u20b9 18,00,000
\n(D) \u20b9 12,00,000
\nHint:
\nLiquid Ratio = \\(\\frac{\\text { Current Assets – Stock }}{\\text { Current Liabilities }}\\)
\n1.6 = \\(\\frac{28,00,000-\\text { Stock }}{10,00,000}\\)
\nStock = 12,00,000
\nAnswer:
\n(D) \u20b9 12,00,000<\/p>\n

Question 70.
\nS Ltd. gives the following information:
\nNetworking capital \u20b9 2,80,000
\nCurrent ratio 2.4
\nLiquid ratio 1.6
\nCurrent Assets =?
\n(A) \u20b9 2,00,000
\n(B) \u20b9 2,80,000
\n(C) \u20b9 4,80,000
\n(D) \u20b9 3,60,000
\nHint:
\nCurrent Ratio =\\(\\frac{x}{y}\\)
\n2.4y = \\(\\frac{x}{y}\\)
\n2.4y = x
\nWorking Capital = CA – CL
\n2,80,000 = 2.4y – y
\n2,80,000 = 1.4y
\ny = 2,00,000
\nx = Current Assets = 2,00,000 \u00d7 2.4 = 4,80,000
\nAnswer:
\n(C) \u20b9 4,80,000<\/p>\n

Question 71.
\nDebtors as per working capital statement = \u20b9 3,00,000
\nDebtors collection period = 45 days
\nGross profit ratio = 20%
\nCash sales = \u20b9 5,00,000
\nNote: 1 Year = 365 days Total sales = ?
\n(A) \u20b9 24,00,000
\n(B) \u20b9 19,00,000
\n(C) \u20b9 29,00,000
\n(D) \u20b9 25,00,000
\nHint:
\nDebtors Collection Period = \\(\\frac{\\text { Debtors }}{\\text { Credit Sales }}\\) \u00d7 365 days
\n45 = \\(\\frac{3,00,000}{\\text { Credit Sales }}\\) \u00d7 365 days
\nCredit Sales = 24,00,000
\nTotal sales = 24,00,000 + 5,00,000 = 29,00,000
\nAnswer:
\n(C) \u20b9 29,00,000<\/p>\n

Question 72.
\nThe operating cycle days of Ramji Ltd. is 167 days. Other details are as follows:
\nRaw material stock velocity 79 days
\nDebtors collection period 70 days
\nWIP conversion period 3 6 days
\nFinished goods 29 days
\nconversion period
\nCreditors payment period =?
\n(A) 47 days
\n(B) 94 days
\n(C) 52 days
\n(D) 59 days
\nHint:
\nLet the creditors payment period be \u2018x\u2019.
\n79 + 70 + 36 + 29 – x = 167
\n– x = – 47
\nx = Creditors payment period = 47 days
\nAnswer:
\n(A) 47 days<\/p>\n

Question 73.
\nOperating cost is \u20b9 18,90,000.
\nCurrent assets are \u20b9 5,20,000
\nCurrent liabilities are \u20b9 1,00,000
\nOperating cycle days =?
\n(Assume a 360 day year.)
\n(A) 80 days
\n(B) 99 days
\n(C) 19 days
\n(D) 70 days
\nHint:
\nWorking capital = 5,20,000 – 1,00,000 = 4,20,000
\nWorking Capital = \\(\\frac{\\text { Operating Cost }}{360 \\text { days }}\\) \u00d7 Operating Cycle days
\n4,20,000 = \\(\\frac{18,90,000}{360 \\text { days }}\\) \u00d7 Operating Cycle days
\nOperating Cycle days = 80 days
\nAnswer:
\n(A) 80 days<\/p>\n

Question 74.
\nNS Ltd. gives the following information:
\nCurrent Ratio = 2.4
\nQuick Ratio =1.0
\nStock = \u20b9 5,60,000
\nCurrent Assets = ?
\n(A) \u20b9 9,60,000
\n(B) \u20b9 6,90,000 .
\n(C) \u20b9 4,00,000
\n(D) \u20b9 4,60,000
\nHint:
\nCurrent Ratio = \\(\\frac{x}{y}\\)
\n2.4 = \\(\\frac{x}{y}\\)
\n2.4y = x
\nQuick Ratio = \\(\\)
\n1 = \\(\\)
\ny = 4,00,000
\nx Current Assets = 4,00,000 \u00d7 2.4 = 9,60,000
\nAnswer:
\n(A) \u20b9 9,60,000<\/p>\n

Question 75.
\nGross profit ratio = 20%.
\nStock velocity = 6 month
\nGross profit for the year ended amounts to \u20b9 5,00,000. The stock of the year is \u20b9 20,000 more than what it was at the beginning of the year.
\nClosing stock =?
\n(A) \u20b9 10,00,000
\n(B) \u20b9 9,90,000
\n(C) \u20b9 10,10,000
\n(D) \u20b9 10,20,000
\nHint:<\/p>\n\n\n\n\n\n
Sales<\/td>\n25,00,000<\/td>\n<\/tr>\n
(-) Gross profit 20%<\/td>\n(5,00,000)<\/td>\n<\/tr>\n
Cost of goods sold<\/td>\n20,00,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Stock velocity = \\(\\frac{\\text { Average Stock }}{\\text { Cost of goods sold }}\\) \u00d7 12
\n6 = \\(\\frac{x}{20,00,000}\\) \u00d712
\nx = Average Stock 10,00,000
\nLet Opening stock be = x
\nClosing stock = x + 20,000
\nAverage Stock = \\(\\frac{\\text { Opening Stock }+\\text { Closing stock }}{2}\\)
\n10,00,000 = \\(\\frac{x+(x+20,000)}{2}\\)
\n20,00,000 = 2x + 20,000
\n19,80,000 = 2x
\nx = Opening stock 9,90,000
\nClosing stock = 9,90,000 + 20,000 = 10,10,000
\nAnswer:
\n(C) \u20b9 10,10,000<\/p>\n

Question 76.
\nNo. of operating cycle in a year=4.5
\nNo. of days in year = 360 days
\nWorking capital = 8,40,000
\nOperating cost =?
\n(A) \u20b9 35,00,000
\n(B) \u20b9 37,80,000
\n(C) \u20b9 36,40,000
\n(D) \u20b9 38,80,000
\nHint:
\nNo. of operating cycle in a year = \\(\\frac{360 \\text { days }}{\\text { Operating Cycle days }}\\)
\n4.5 = \\(\\frac{360 \\text { days }}{\\text { Operating Cycle days }}\\)
\nOperating Cycle days = 80 days
\nWorking Capital = \\(\\frac{\\text { Operating Cost }}{360 \\text { days }}\\) \u00d7 Operating Cycle days
\n8,40000= \\(\\frac{\\text { Operating Cost }}{360 \\text { days }}\\) \u00d7 80
\nOperating Cost = 37,80,000
\nAnswer:
\n(B) \u20b9 37,80,000<\/p>\n

Question 77.
\nIf current assets are \u20b9 1,09,05,750 and current liabilities are \u20b9 32,50,000 then maximum permissible bank finance as per first method of Tandon Committee norms is –
\n(A) \u20b9 57,41,813
\n(B) \u20b9 49,29,313
\n(C) \u20b9 52,29,813
\n(D) \u20b9 49,41,813
\nHint:
\nMaximum permissible bank finance as per Tandon Committee norms:
\nMethod 1: 15% of (Current Assets – Current Liabilities)
\n= 0.75 \u00d7 (1,09,05,750 – 32,50,000)
\n= 57,41,813
\nAnswer:
\n(A) \u20b9 57,41,813<\/p>\n

Question 78.
\nDebtors velocity = 3 months Sales = \u20b9 25,00,000
\nBills receivable & Bills payable were \u20b9 60,000 and \u20b9 36,667 respectively.
\nSundry debtors =?
\n(A) \u20b9 6,25,000
\n(B) \u20b9 5,25,000
\n(C) \u20b9 5,65,000
\n(D) \u20b9 6,65,000
\nHint:
\nDebtors Velocity = \\(\\frac{\\text { Account Receivable }}{\\text { Credit Sales }}\\) \u00d7 12
\n3 = \\(\\frac{x}{25,00,000}\\) \u00d7 12
\nx = Account Receivable = 6,25,000
\nDebtors + Bills Receivable = Account Receivable
\nx + 60,000 = 6,25,000
\nx = Debtors = 5,65,000
\nAnswer:
\n(C) \u20b9 5,65,000<\/p>\n

Question 79.
\nCreditors velocity = 2 months.
\nCost of goods sold = \u20b9 20,00,000
\nOpening stock = \u20b9 9,90,000
\nClosing stock = \u20b9 10,10,000
\nBills receivable & Bills payable were \u20b9 60,000 and \u20b9 36,667 respectively.
\nCreditors =?
\n(A) 3,36,667
\n(B) 3,66,333
\n(C) 3,30,367
\n(D) 3,00,000
\nHint:
\nOpening stock + Purchase – Closing stock = Cost of goods sold
\n9,90,000 + x – 10,10,000 = 20,00,000 .
\nx = Purchase = 20,20,000
\nCreditors Velocity = \\(\\frac{\\text { Accounts Payable }}{\\text { Credit Purchases }}\\) \u00d7 12
\n2 = \\(\\frac{x}{20,20,000}\\) \u00d7 12
\nx = Accounts Payable = 3,36,667
\nCreditors + Bills Payable = Account Payable
\nx + 36,667 = 3,36,667
\nx = Creditors = 3,00,000
\nAnswer:
\n(D) 3,00,000<\/p>\n

Question 80.
\nIf current assets are \u20b9 1,09,05,750 and current liabilities are \u20b9 32,50,000 then maximum permissible bank finance as per second method of Tandon Committee norms is ___
\n(A) \u20b9 57,41,813
\n(B) \u20b9 49,29,313
\n(C) \u20b9 52,29,813
\n(D) \u20b9 49,41,813
\nHint:
\nMaximum permissible bank finance as per Tandon Committee norms:
\nMethod 2: 15% of Current Assets – Current Liabilities
\n= (0.75 \u00d7 1,09,05,750) – 32,50,000
\n= 49,29,313
\nAnswer:
\n(B) \u20b9 49,29,313<\/p>\n

Question 81.
\nWhen the current ratio is 2:5, and the amount of current liabilities is \u20b9 25,000, what is the amount of current assets?
\n(A) \u20b9 62,500
\n(B) \u20b9 12,500
\n(C) \u20b9 10,000
\n(D) None of these
\nAnswer:
\n(C) \u20b9 10,000<\/p>\n

Question 82.
\nToted \u2018cost of sales\u2019 and \u2018sales’ of Gama Ltd. is \u20b9 3,19,80,000 and \u20b9 4,13,40,000 respectively. It makes 20% sales on a cash basis. Debtors are allowed 2 months credit period. If the company calculates working capital on a cash cost basis then debtors are __
\n(A) \u20b9 55,12,000
\n(B) \u20b9 42,12,000
\n(C) \u20b9 42,64,000
\n(D) \u20b9 55,64,000
\nHint:<\/p>\n\n\n\n\n\n
Total Cost<\/td>\n3,19,80,000<\/td>\n<\/tr>\n
(-) 20% Cash Sales Cost<\/td>\n(63,96,000)<\/td>\n<\/tr>\n
Cost of Credit Sales<\/td>\n2,55,84,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debtors = (2,55,84,000 \u00d7 \\(\\frac{2}{12}\\)) = 42,64,000
\nAnswer:
\n(C) \u20b9 42,64,000<\/p>\n

Question 83.
\nIf credit sales for the year are \u20b9 5,40,000 and Debtors at the end of the year are \u20b9 90,000 the Average Collection Period will be?
\nNote: 1 year = 365 days
\n(A) 30 days
\n(B) 61 days
\n(C) 90 days
\n(D) 120 days
\nAnswer:
\n(B) 61 days<\/p>\n

Question 84.
\nTotal wages for the year of Rakshit Ltd., a listed company are \u20b9 64,80,000 out of which \u20b9 2,40,000 are paid in cash immediately after they became due.
\nLag in payment of wages -1 month. If you are appointed to prepare a working capital statement for the company, then how much outstanding wages you will take while preparing a working capital statement?
\n(A) \u20b9 5,40,000
\n(B) \u20b9 5,50,000
\n(C) Not enough data
\n(D) \u20b9 5,20,000
\nHint:
\nWages on credit = 64,80,000 – 2,40,000 = 62,40,000
\n\"Working
\nAnswer:
\n(D) \u20b9 5,20,000<\/p>\n

Question 85.
\nK Ltd. had sales last year of \u20b9 26,50,000, including cash sales of \u20b9 2,50,000. If its average collection period was 36 days, its ending accounts receivable balance is closest to
\n(Assume a 365 days year.)
\n(A) \u20b9 2,40,000
\n(B) \u20b9 2,36,712
\n(C) \u20b9 2,63,127
\n(D) \u20b9 2,40,721
\nAnswer:
\n(A) \u20b9 2,40,000<\/p>\n

Question 86.
\nOutstanding overheads appearing in the balance sheet are 9,75,000. Lag in payment of overheads is 30 days. Overheads accrue evenly throughout the year. Total overheads incurred by the company are –
\n(A) \u20b9 1,17,00,000
\n(B) \u20b9 32,500
\n(C) \u20b9 2,92,50,000
\n(D) \u20b9 1,92,50,000
\nHint:
\nOutstanding Overheads = \\(\\frac{\\text { Total Overheads } \\times \\text { Lag in payment of overheads }}{360}\\)
\n9,75,000 = Total Overheads \u00d7 \\(\\frac{30}{360}\\)
\nTotal Overheads = 1,17,00,000
\nAnswer:
\n(A) \u20b9 1,17,00,000<\/p>\n

Question 87.
\nFrom the information given below calculate the amount of fixed assets.
\nFixed assets to proprietors fund = 1.25 Net Working Capital = \u20b9 6,00,000
\n(A) 20,00,000
\n(B) 24,00,000
\n(C) 3,42,857
\n(D) 8,00,000
\nHint:
\nFixed Assets to Proprietors Funds = \\(\\frac{\\text { Fixed Assets }}{\\text { Proprietors Funds }}\\)
\n1.25 = \\(\\frac{x}{y}\\)
\n1.25 y = x
\nProprietors Funds = Fixed Assets – Working Capital
\ny= 1.25y – 6,00,000
\n0.25y = 6,00,000
\ny = 24,00,000
\nAnswer:
\n(B) 24,00,000<\/p>\n

Question 88.
\nIf a firm has \u20b9 100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm\u2019s Net Working Capital?
\n(A) \u20b9 10
\n(B) \u20b9 100
\n(C) \u20b9 200
\n(D) \u20b9 1,200
\nHint:
\nCurrent Ratio = \\(\\frac{x}{y}\\)
\n1.2 = \\(\\frac{x}{y}\\)
\n1.2y = x
\nQuick Ratio = \\(\\frac{\\text { Current Assets – Stock }}{\\text { Current Liabilities }}\\)
\n1.1 = \\(\\frac{1.2 y-100}{y}\\)
\n1.1y = 1.2y – 100
\ny= 1,000
\nx = Current Assets = 1,000 \u00d7 1.2 = 1,200
\nWorking Capital = 1,200 – 1,000 = 200
\nAnswer:
\n(C) \u20b9 200<\/p>\n

Question 89.
\nA company plans to manufacture andsell400unitsofdomesticappliances per month at a price of \u20b9 600 each. The ratios of cost to selling price are:<\/p>\n\n\n\n\n\n\n\n
\u00a0<\/strong><\/td>\n(% of the selling price)<\/strong><\/td>\n<\/tr>\n
Raw materials<\/td>\n30%<\/td>\n<\/tr>\n
Packing material<\/td>\n10%<\/td>\n<\/tr>\n
Direct labor<\/td>\n15%<\/td>\n<\/tr>\n
Direct expenses<\/td>\n5%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Fixed overhead are \u20b9 4,32,000 p.a.
\nFinished goods stock = 200 units
\nWorking days in a year are taken as 300 days for the budget year. Norms maintained for work-in-progress is 7 days. Finished goods stock and WIP stock will appear in the balance sheet and working capital of the company at –
\n(A) \u20b9 31,920; \u20b9 80,000
\n(B) \u20b9 80,000; \u20b9 31,920
\n(C) \u20b9 90,000; \u20b9 67,200
\n(D) \u20b9 90,000; \u20b9 31,920
\nHint:
\n\"Working
\nCost Structure for the year: (400 \u00d7 12 = 4,800 units)
\n\"Working
\nCost Structure for WIP:
\n\"Working
\nNote: Packing material will not be considered while calculating WIP.
\nAnswer:
\n(D) \u20b9 90,000; \u20b9 31,920<\/p>\n

Question 90.
\nFollowing is the balance sheet of PBX Ltd. Calculate maximum permissible bank finance by the Third Method of Tandon Committee norms. Assume the level of Core Current Assets to be \u20b9 60 lakhs.<\/p>\n\n\n\n\n\n\n\n\n\n
Liabilities<\/strong><\/td>\n\u20b9 Lakhs<\/strong><\/td>\n<\/tr>\n
Equity Shares (\u20b9 10 each)<\/td>\n400<\/td>\n<\/tr>\n
Retained Earnings<\/td>\n1,000<\/td>\n<\/tr>\n
Public Deposits<\/td>\n200<\/td>\n<\/tr>\n
Trade Creditors<\/td>\n160<\/td>\n<\/tr>\n
Bills Payable<\/td>\n200<\/td>\n<\/tr>\n
<\/td>\n1,960<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Assets<\/strong><\/td>\n\u20b9 Lakhs<\/strong><\/td>\n<\/tr>\n
Fixed Assets<\/td>\n1,000<\/td>\n<\/tr>\n
Current Assets:
\nRaw Material<\/td>\n		200<\/td>\n<\/tr>\n
Work-in-progress<\/td>\n300<\/td>\n<\/tr>\n
Finished Goods<\/td>\n150<\/td>\n<\/tr>\n
Debtors<\/td>\n200<\/td>\n<\/tr>\n
Cash at Bank<\/td>\n110<\/td>\n<\/tr>\n
<\/td>\n1,960<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(A) \u20b9 450 lakhs
\n(B) \u20b9 360 lakhs
\n(C) \u20b9 315 lakhs
\n(D) \u20b9 425 lakhs
\nHint:
\nCurrent Assets = 960 Lakhs; Current Liabilities = 360 Lakhs
\nMaximum permissible bank borrowing as per 3rd method of Tandon Committee norms:
\n= [75% of (Current Assets – Core Current Assets)] – Current Liabilities
\n= [0.75 \u00d7 (960 – 60)] – 360
\n= 315 Lakhs
\nAnswer:
\n(C) \u20b9 315 lakhs<\/p>\n","protected":false},"excerpt":{"rendered":"

Students should practice Working Capital Management \u2013 CS Executive Financial and Strategic Management MCQ Questions with Answers based on the latest syllabus. Working Capital Management \u2013 Financial and Strategic Management MCQ Question 1. Working capital is also known as___ (A) Operation capital (B) Operating capital (C) Current assets capital (D) Capital relating to main projects …<\/p>\n

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