WORKING CAPITAL CALCULATION
A) Current Assets
1) Stock of Raw Material (1mth) = Annual Raw mat X 2/12mth
2) Stock of WIP (1.5 mth)
R Mat–Annual Raw mat X 1.5/12mth
+Labour — Annual Labour X 1.5/12mth X 1/2
+Expenses — Annual Expenses X 1.5/12mth X 1/2
3) Stock of Finished goods (2.5 mth) = Total Annual Cost of Prodn. X 2.5/12mth
4) Bills Receivable (3mth) = Credit Sales X 3/12 mth
5) Debtors ( 2mth) = Credit Sales X 2/12 mth
6) Advance for Raw Material(Adv. To creditors) (0.5mth)= Annual Raw mat X
0.5/12mth
7) Advance Fixed Overheads (1.2mth) = Annual Fixed Overheads X 1.2/12mth
8) Prepaid Expenses(1mth) = Annual Expenses X 1/12 mth
9) Cash & Bank Balance
Total Current Assets (CA)
Less: Current Liabilities
1) Creditors for Materials (1mth) = Annual Raw mat X 1/12mth
2)Outstanding Wages (1mth) = = Annual Labour charges X 1/12mth
3) Bills Payable(2mth) = Credit Purchases X 2/12mth
Total Current Liabilities (CL)
Working Capital ( CA – CL )
Eg.—1)Cash balance is 30% of monthly Profit—then prepare cost structure. Find Annual profit (profit per unit X units produced) .Find 30% of Annual profit.
2) If inland & export Sales given calculate Debtors for inland & export Sales separately.
1) Cost W. Cap–àCalculate Debtors and Bill Receivables on Total cost instead of Credit sales.
2) Cash Cost W.Cap.-> Calculate stock of WIP & Finished goods and Debtors and Bill Receivables at Cash Cost ( Total Cost other than Depreciation)
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